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SPECIAL
ANALYSES

BUDGET OF THE
UNITED STATES
GOVERNMENT

FISCAL YEAR 1975

SPECIAL
ANALYSES

BUDGET OF THE
UNITED STATES
GOVERNMENT
FISCAL YEAR 1975

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THE BUDGET DOCUMENTS
Data and analyses relating to the budget for 1975 are published in
four documents:
The Budget of the United States Government, 1975 contains the information that most users of the budget would normally need, including
the Budget Message of the President. The Budget presents an overview
of the President's budget proposals which includes explanations of
spending programs and estimated receipts. This document also contains a description of the budget system and various summary tables
on the budget as a whole.
The Budget of the United States Government, 1975—Appendix contains detailed information on the various appropriations and funds
which comprise the budget.
The Appendix contains more detailed information than any of the
other budget documents. It includes for each agency: the proposed
text of appropriation language, budget schedules for each account,
explanations of the work to be performed and the funds needed, proposed general provisions applicable to the appropriations of entire
agencies or groups of agencies, and schedules of permanent positions.
Supplemental proposals for the current year and new legislative
proposals are identified separately. Information is also provided on
certain activities, whose outlays are not part of the budget totals.
Special Analyses, Budget of the United States Government, 1975
contains 16 special analyses that are designed to highlight specified
program areas or provide other significant presentations of Federal
budget data.
This document includes analytical information about: Government
finances and operations as a whole and how they affect the economy;
Government-wide program and financial information for Federal
education, manpower, health, income security, civil rights, and crime
reduction programs; trends and developments in the areas of Federal
aid to State and local governments, research and development, and
environmental protection.
The United States Budget in Brief, 1975 provides a more concise, less
technical overview of the 1975 Budget than the above volumes.
Summary and historical tables on the Federal budget and debt are
also provided, together with graphic displays.
GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise
noted.
2. Detail in the tables, text, and charts of this volume may
not add to the totals because of rounding.

TABLE OF CONTENTS
Page
PART 1. ECONOMIC A N D FINANCIAL ANALYSES
A. Federal transactions in the national income accounts
B. Funds in the budget
C. Borrowing, debt, and investment
D. Investment, operating, and other budget outlays
__
E. Federal credit programs
F. Principal Federal statistical programs
G. Civilian employment in the executive branch
PART 2. FEDERAL SOCIAL PROGRAMS
H. Federal education programs
___
_
I. Federal manpower programs
J. Federal health programs
.,
K. Federal income security programs
L. Federal civil rights activities
_
___
M. Federal programs for the reduction of crime
_
PART 3. SPECIALIZED ASPECTS A N D VIEWS OF FEDERAL PROGRAMS
N. Federal aid to State and local governments
_
O. Federal research and development programs
P. Federal environmental programs

5
7
20
31
49
73
92
101
107
109
124
136
160
171
189
201
203
219
235

PART 1

ECONOMIC AND FINANCIAL
ANALYSES

INTRODUCTION
Part 1 provides analyses and tabulations which cover Government
finances and operations as a whole, and reflect the ways in which Government finances affect the economy. These special analyses encompass those designated A through G.
Special Analysis A presents the Federal budget estimates in terms
of the national income accounts. It is designed to explain the relationships of the unified budget of the Federal Government to the national
income accounts, which constitute the most widely used measure of
aggregate economic activity in the United States.
Special Analysis B classifies budget information by the groups of
funds (Federal and trust) which comprise the budget.
Special Analysis C summarizes current developments and trends in
Federal borrowing, debt, and interest, and the investment of Federal
and trust funds in Federal securities. It includes a summary of both
Federal and federally assisted borrowing from the public to display
some measure of the Government's impact on the credit markets.
Special Analysis D classifies budget outlays in terms of the duration
and nature of the benefits derived, distinguishing those of an investment or development type from those which primarily yield current
benefits. Apart from this analysis the U.S. budget, unlike those of
some other governments, includes outlays which are for "capital" or
investment-type activities in the same accounts in which "current"
activities and costs are shown.
Special Analysis E covers Federal credit programs—direct loans,
guarantees of private loans, and loans of federally sponsored credit
agencies. It includes an analysis of loan subsidy costs, and provides
an aggregate measure of total credit supplied to the public under
Federal auspices.
Special Analysis F reflects the year-to-year level of activity under
the principal programs of the Federal Government for collecting
current statistics, and current spending for periodic statistics obtained
in census-type surveys usually conducted every 5 or 10 years.
Special Analysis 6 deals with the levels of civilian employment in
the executive branch. It also contains figures on total Federal personnel (including military personnel).

SPECIAL ANALYSIS A
FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS

The budget is designed to serve many purposes:
• It is an economic document that reflects the taxing and spending
policies of the Government for promoting economic growth, high
employment, relative price stability, and a strong balance-ofpayments position;
• It proposes an allocation of resources between the private and
public sectors, within the public sector, and—through its impact
on consumption and investment decisions and the distribution of
income—within the private sector;
• It sets forth the President's request to Congress for appropriation
action on existing or new programs, and changes in tax legislation; and
• It is a report to the Congress and the people on how the Government
has spent the funds entrusted to it in past years.
No single budget concept can satisfy all these purposes fully. The
budget document and related Treasury reports provide complete, detailed information on the finances of the Federal Government. For
study of aggregate economic activity, however, the national income
accounts (NIA) of the United States provide the most important
measures.
This special analysis shows the direct Federal impact of the budget
on the economy as measured in the NIA. It is divided into two major
sections. The first shows the size, composition, and trends in the
Federal sector receipts and expenditures. It focuses heavily on the
3 years covered by the budget, but provides some historical background where this is relevant. The latter part of the analysis is devoted
to explaining the major differences between the budget and NIA concepts. For a discussion of fiscal policy, see Part 1 of the budget (the
Budget Message) and the Economic Report of the President.
Table A-l shows Federal sector NIA receipts, expenditures, and
deficits for 1973-75. The Federal sector is expected to have a $4.7
billion actual deficit in fiscal year 1974; on a full-employment basis it
would be in surplus. In fiscal year 1975 the actual deficit is anticipated
to rise to $8.6 billion, although again on a full-employment basis the
Federal sector would show a surplus.

THE BUDGET FOR FISCAL YEAR 19 75

Table A-1. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS (in billions of dollars)
1973

1974

1975

Description

Change,
1973 to
1975

RECEIPTS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts

107. 2
43.8
20.9
71.4

123. 7
50.3
23. 3
83.2

135. 3
50.2
27. 5
91.8

28.1
6.4
6.6
20.4

243.3

280.5

304.8

61.5

104.5
(73.9)
(30.6)
89.4
(86.8)
(2.6)
40.4
14.4

111.5
(75.3)
(36.2)
107.2
(102.5)
(4.7)
44.1
18.2

121.6
(82.0)
(39.6)
123.5
(120.7)
(2.8)
46. 6
19.6

17.1
(8.1)
(9.0)
34.1
(33.9)
(.2)
6. 2
5.2

EXPENDITURES
Purchases of goods and services
Defense
Nondefense
Transfer payments
Domestic ("to persons")
Foreign
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of Government enterprises
Total expenditures
Surplus or deficit ( - )

6.4

4.2

2.1

-4.3

255.1

285.2

313.4

58.3

-11.8

-4.7

-8.6

3.2

Trends in Federal sector receipts.—As shown in table A-1, receipts are divided into four major categories. The largest category—
personal tax and nontax receipts—currently provides around 45% of
the total. Since the bulk of these receipts is derived from individual income taxes, they tend to respond rapidly to the level of economic activity. Individual income taxes are the dominant element in making
the Federal tax structure progressive, because tax rates rise with higher
levels of income.
Corporate profits are among the most volatile components of national income; consequently, corporate profits tax accruals are likewise volatile. Traditionally, the NIA corporate profits taxes have
differed from the corresponding budget category primarily because:
(1) The unified budget shows the deposit of earnings by the Federal
Reserve System as miscellaneous receipts whereas in the NIA they are
treated as taxes on corporate profits, and (2) the unified budget records
corporate profits taxes when the cash payments are received, while in
the NIA they are recorded when the profits are earned (i.e., accrued).
In addition, the proposed emergency windfall profits tax on the sale of
domestic crude oil will be classified as an indirect business tax in the
NIA whereas the budget classifies this as a part of corporate income
taxes. This new tax will reduce corporate profits taxes (as defined in
the NIA) by $0.6 billion in 1974 and $2.0 billion in 1975 while raising
indirect business taxes by $1.5 billion in 1974 and $4.9 billion in 1975.

SPECIAL ANALYSES

Indirect business tax and nontax accruals are composed mainly of
excise taxes and customs duties, but also include rents and royalties
paid by business to the Government. For most of the Nation's early
history this grouping was the dominant source of Federal receipts; as
recently as 1940, it was still the largest single category. Yet by 1975,
even including the proceeds from the emergency windfall profits tax, it
will constitute only about 9% of total receipts—significantly less
than any of the other receipt categories.
Contributions for social insurance constitute the second largest
category of Federal sector receipts. The rapid rise in these receipts
since World War II has been caused by the growth in the labor
force and in wage rates, the expanded coverage of older social insurance programs, the enactment of new ones, and the higher taxable wage base and contribution rates needed to finance liberalization
of benefits.
The following chart shows the average percentage distribution of
receipts by category for 5-year periods.
Distribution of Federal Sector Receipts by Category
Percent

5-Yes* Averages

100

Contributions {or
Social Insurance

Indirect Business Tax
and Non-Tax Accruals
Corporate Profits
Tax Accruals

Personal Taxes and
Non-Toxes

1971-75
istimate

THE BUDGET FOR FISCAL YEAR 19 75

The chart shows several major trends in budget receipts. The relative increase in social insurance contributions reflects the expansion
of the social insurance trust funds at a much more rapid rate than the
remainder of the budget. Transfer payments financed by these funds
have risen correspondingly. The relative stability of the percentage
arising from personal taxes reflects two opposing movements: (1)
The normal increase in these taxes as inflation and higher productivity
results in higher cash incomes which shift taxpayers into higher tax
brackets, and (2) the periodic legislated changes in tax rates, generally
downward.
The lower percentage of receipts arising from corporate profits
taxes results from three factors: (1) A long-term decline in corporate
profits relative to the GNP; (2) changes in the definition of corporate
profits for tax purposes (largely increases in permissible depreciation
allowances); and (3) the nearly constant tax rate on taxable corporate
profits during the past decade.
Trends in Federal sector expenditures.—Federal sector expenditures are also divided into several major groupings. The primary division is between purchases of goods and services (defense and
nondefense) and all other transactions. Purchases are that portion of
the Nation's output that is bought directly by the Federal Government. The other categories consist primarily of transfers of income
to individuals, other levels of government, or other groups which, in
turn, can use the income to finance their own purchases of goods and
services.
A major shift in the composition of Federal sector expenditures has
been underway for several years. As the chart on expenditures shows,
defense purchases of goods and services account for a declining share.
There is a corresponding rise in other components, especially grantsin-aid and domestic transfer payments (which include social security
benefits as well as military and civil service retirement benefits).
While this shift has been underway for two decades, the change in
recent years has been dramatic. In 1973 defense purchases as a percentage of Federal sector expenditures were the lowest they had been
since 1940, and the percentages for 1974 and 1975 will be even lower.
In contrast, outlays for domestic transfer payments and grants are
expected to amount to over half of total Federal sector expenditures by
1975; just one decade earlier they were less than one-third of the total.

SPECIAL ANALYSES
Distribution of Federal Sector Expenditures by Category
Percent

5-Year Averages

too

Interest and Otner
Grants-in-Aid

Domestic
Transfer Payments

Covers only 4 years since 1946 included significant World War II spending.

Defense purchases of goods and services.—Over 9 5 % of defense pur-

chases are made by one agency—the Department of Defense. The
remainder includes programs of military assistance to other countries,
purchases by the Atomic Energy Commission, and purchase and sale
of defense stockpiles. Despite major military and civilian pay raises
in recent years, the large-scale reductions in military personnel, other
defense-related employment, and other economies have resulted in
defense purchases declining to the lowest proportion of our GNP
since 1950.
Nondejense purchases oj goods and services.—This category covers

the goods and services purchased for Federal civilian operations
including such programs as operation of national forest, park, and
recreation areas; space exploration; promotion of commerce; acquisition and disposal of agricultural commodities; construction of
flood control and navigation projects; operation of the Federal
airway system; a wide variety of medical and other scientific research;
the capital outlay of Government-sponsored enterprises; Federal
law enforcement activities; and operation of veterans hospitals.

THE BUDGET FOR FISCAL YEAR

1975

Table A-2. NONDEFENSE PURCHASES OF GOODS AND SERVICES FOR
SELECTED AGENCIES AT 3-YEAR INTERVALS, 1966-75 (in billions of dollars)
Agency

Department of Agriculture
Department of Defense, Civil
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Transportation
Treasury Department:
Interest paid abroad
Other
National Aeronautics and Space Administration
Veterans Administration
All other i
_
Total

1966

1969

1972

1975

0.5
1.3
1.4
.4
1.2
1.1

3.1
1.3
2.7
.5
1.2
1.4

2.6
1.6
3.3
1.5
1.5
2.4

2.5
1.7
5.2
2.2
2.2
3.1

.5
.9
5.9
1.5
2.6

.7
1.0
4.2
1.8
3.5

2.4
1.5
3.2
2.8
6.5

3.0
2.4
3.2
3.8
10.3

17.3

21.4

29.3

39.6

1
Includes allowance for civilian agency pay raise and purchases by Governnent-owned enterprises
excluded from the budget.

Table A-2 shows a distribution of total nondefense purchases at
3-year intervals since 1966. The Department of Health, Education,
and Welfare now accounts for more nondefense purchases that affect
GNP than any other agency; these purchases are largely for medical
research and for the administrative expenses of grant and transfer
programs. Purchases by NASA have dropped substantially over this
period: in 1966 they were one-third of nondefense purchases, but by
1975 they are expected to total around 8%. The large-scale fluctuations
in nondefense purchases by the Agriculture Department are caused
primarily by the purchase and sale of commodity inventories. Nondefense purchases by the Department of Defense, Civil and Department of the Interior are heavily concentrated in water, power, and
reclamation programs while the bulk of nondefense purchases by the
Veterans Administration is for hospitals and medical care.
Domestic transfer payments.—This is now the largest category of
Federal sector expenditures. Spending for domestic transfers has
expanded rapidly, mainly because of more beneficiaries and higher
benefit payments under the social insurance programs. Approximately
two-thirds of the payments are for retirement and disability, with
the old-age survivors insurance fund constituting nearly 70% of
retirement and disability payments and over 45% of all domestic
transfer payments. Other major components of retirement and disability are civil service retirement, railroad retirement, disability
insurance, military retired pay, and supplemental security income.

SPECIAL ANALYSES

Table A-3. DOMESTIC TRANSFER PAYMENTS (in billions of dollars)

Fiscal year

1960
1961
1962 .
1963
1964 . . . .
1965 . _
1966
1967
1968
1969
1970
1971
1972
1973
1974 estimate . .
1975 estimate

Total

20.6
23.6
25.1
26.4
27.3
28.3
31.8
37.2
42.7
48.5
54.8
67.4
75.8
86.8
102.5
120.7

Retirement and
disability 1

13.1
14.4
16.4
18.0
19.1
20.2
23.9
25.3
27.9
32.0
35.5
42.4
47.8
58.5
69.6
83.0

Hospital
and
supplementary
medical
insurance

3.2
5.1
6.3
6.8
7.5
8.4
9.0
11.4
13.3

Food
stamps

*
*
*
*
0.1
.1
.2
.2
.6
1.5
1.8
2.1
2.9
3.8

Veterans
Unembenefits ployment
and
benefits
insurance

4.4
4.6
4.6
4.8
4.6
4.7
4.7
5.3
5.5
6.2
6.9
8.0
8.8
9.7
10.4
10.3

2.7
4.2
3.6
3.1
2.9
2.5
2.1
2.1
2.2
2.3
3.0
5.6
6.6
4.8
5.0
6.5

Other

0.4
.4
.5

.5
.6

.8
1.2
1.2
1.8
1.6
2.0
2.3
2.4
2.7
3.2
3.7

'Less than $50 million.
Includes black-lung benefits and supplemental security income benefits.

As a result of legislation passed in 1972, the Federal supplemental
security income program is providing direct Federal payments of cash
assistance to certain categories of needy people (mainly elderly and
handicapped) starting January 1, 1974. These payments (amounting
to $4.3 billion in 1975) replace benefits which were previously made
by State and local governments and financed with substantial grant
assistance. This direct Federal operation maintains or liberalizes
benefits to individuals while relieving the State and local governments
of the cost of matching the Federal payment.
Another large group of domestic transfer payments is for medical
care under the hospital and supplementary medical insurance programs (Medicare). These transfers did not exist prior to 1967, but by
1975 they are expected to provide $13.3 billion to beneficiaries.
The food stamp program began in 1961 and was a relatively small
but growing program until 1969. By 1972 the program had reached
a level of $1.8 billion and by 1975 it will be more than double the
1972 level.
Veterans benefits and insurance have long been a major group of
transfer payments. These payments expanded rapidly beginning in
1966, due in part to the war in Vietnam, but also in part to the enactment of the GI bill for post-Korean war veterans. Payments are
expected to remain high in 1975 because of cost-of-living and other
benefit increases despite a decline in the number of ex-servicemen
studying under the GI bill.

THE

BUDGET FOR FISCAL YEAR

1975

Unemployment benefits fluctuate according to the rate of unemployment in the economy. In addition, they tend to rise gradually
over time as average benefits levels rise. The increase in 1974 and
1975 will be a major aid in cushioning the hardship on individuals
caused by the impact of the energy shortage on the economy.
Grants-in-aid.—This group of expenditures is composed of programs
designed to help State and local governments provide general public
services or to finance programs for the n°edy.
A major theme of this Administration has been grant consolidation
and simplification to permit State and local governments greater
flexibility in using Federal aid money to solve local problems. This
theme is discussed at several places in the budget, particularly in the
budget message. While the table below groups the spending into a few
traditional categories, because of the basic reforms that have either
been enacted or proposed, Federal aid is now substantially more flexible
and less categorical than in prior years. This is highlighted by the
newest major Federal aid program—General Revenue Sharing—which
is discussed in detail in various sections of the budget, most extensively in Special Analysis N.
Table A-4. FEDERAL GRANTS-IN-AID (in billions of dollars)

Fiscal year

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
_ _.
1973
1974 estimate
1975 estimate

Total

General
Revenue I ncome Health
Sharing security

6.8
6.9
7.6
8.4
9.8
10.9
12.7 _.
14.8
17.8
19.2
22.6
27.0
32.9
40.4
44.1
46.6

6.6
6.1
6.2

2.3
2.4
2.6
2.9
3.1
3.2
3.3
3.3
4.6
4.8
5.7
8.0
11.4
10.9
11.6
11.8

0.2
.3
.4
.5
.7
.7
1.3
2.0
2.8
3.5
4.1
4.6
6.1
6.3
7.9
8.8

Education and
manpower

Transportation

0.5
.5
.6
.7
.8
1.1
2.2
3.2
3.9
3.7
4.3
5.0
6.1
6.3
6.5
6.5

3.0
2.6
2.8
3.0
3.7
4.1
4.0
4.0
4.3
4.4
4.6
4.9
5.0
5.3
5.2
5.5

Community
development

Other

and

housing
0.1
.1
.2
.2
.2
.4
.4
.6
.8
1.1
i.7

2.o
2.2
2.2
2.3
2.4

().«
9
.0
.0
.4
.5
.6
.6
.5
.7
;U
:>.6
2 .1
2 .7
A .3
5 .5

The income security and health grants are largely, but not exclusively, devoted to providing assistance to low-income persons. Most
expenditures for these programs—which include public assistance,
Medicaid, and vocational rehabilitation—are paid out under statutory
formulas. Special Analysis J (Federal Health Programs) and Special
Analysis K (Federal Income Security Programs) provide more detailed information about these programs. These grants would have
risen even more rapidly in 1974 and 1975 except for the assumption
by the Federal Government of direct payment of assistance to the
elderly and the disabled. This Federal assumption does not represent
a decline in Federal assistance to States; rather, the Federal payments

SPECIAL ANALYSES

are made directly to persons instead of to States. Since this also reduces
State and local matching payments and eliminates the cost to State
and local governments of administering the program, the States will
achieve significant fiscal relief.
Another group of grant programs is devoted to education and
manpower activities. The largest education grant programs are for
elementary and secondary education (which are focused heavily on economically deprived areas), higher education, and Federal aid to impacted areas (for school districts with an unusually high proportion of
children of Federal civilian or military personnel). The 1975 budget
proposes to fund much of this assistance through a consolidated education grant program with fewer Federal restrictions. A relatively new
educational program is for emergency school assistance to overcome
problems of racial isolation. Manpower training programs and public
service jobs constitute the bulk of Federal manpower grants. Special
Analysis H (Federal Education Programs) and Special Analysis I
(Federal Manpower Programs) discuss education and manpower programs in detail.
Transportation has been a major component of grant outlays since
the mid-1950's. We have financed a nationwide system of roads that
is unsurpassed in the world. While work on this system is continuing,
primary attention is also being given to improving the effectiveness
and safety of our aviation, passenger railroad, and urban mass transit
systems and to energy conservation.
The grants for community development and housing are largely for
the urban renewal and Model Cities programs. The 1975 budget
proposes consolidated community development grants to replace
these programs and provide the local governments with more flexibility
in the use of these funds. While the budget classifies payments for
low-rent public housing as grants, in the NIA they are counted as
nondefense purchases.
The final category in table A-4 includes grants for pollution control
and abatement and for law enforcement and justice. Grants made by
the Environmental Protection Agency will total $3.5 billion in 1975;
this is 7}i times as large as in 1972.
A more detailed discussion of grant-in-aid programs is presented in
Special Analysis N (Federal Aid to State and Local Governments) of
this budget, including a discussion of the major differences between
grants as used in the three principal Federal statistical series on
grants.
Other Federal sector expenditures.—Three other categories normally
complete the Federal sector expenditures. The largest category—net
interest paid—is affected by changes in Federal debt outstanding and
by changes in interest rates. While net interest varies somewhat from
year to year, it has been between 6% and 8% of Federal sector
expenditures in most years since 1952.
Foreign transfer payments are primarily of three types—expenditure of dollars to assist foreign economic development, grants of foreign
currencies that are earned from the sale of surplus agricultural
products, and payments to individuals living abroad under social
security and similar programs. Although payments to individuals are
gradually rising (roughly in proportion with the rise in GNP), total
Foreign transfer payments have been stable (and a declining proportion

THE BUDGET FOR FISCAL YEAR

19 75

of GNP) for many years. In 1974 foreign transfers will be increased
by a one-time payment of the grant to India of $2.2 billion worth of
rupees as part of an overall rupee debt settlement.
Subsidies less current surplus of Government enterprises consist of
two elements: (a) Subsidy payments to resident businesses (including
farms); and (b) the "current surplus" or "deficit" of Government
enterprises.
(a) A subsidy is a monetary grant to a unit engaged in commercial
activities. Examples of such subsidies are: Government payments to
farmers for land retirement, payments to air carriers, and the operating
differential subsidy of the Maritime Administration.
(b) Government enterprise is the term applied to certain operations
of the Government (usually appearing in the budget as public enterprise revolving funds) for which operating costs are to a great extent
covered by the sale of goods and services to the public, as distinguished
from those financed by tax receipts. Government enterprises conduct
operations that are of a business-type nature. The difference between
their sales and current operating expenses constitutes the surplus or
deficit of Government enterprises. The largest of these enterprises are
the Commodity Credit Corporation, the Postal Service (which is no
longer included in the budget), and the Tennessee Valley Authority.
RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR OF THE
NATIONAL INCOME ACCOUNTS

Table A-5 shows the major differences between the budget and the
Federal sector of the NIA. These differences are explained in this
section.
Table A-5. RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR,
NIA (in billions of dollars)
Description

1973
actual

1974
estimate

1975
estimate

RECEIPTS
Total budget receipts

232.2

Government contribution for employee retirement (grossing)
Other netting and grossing
Adjustment to accruals
Other
Federal sector, NIA receipts

270.0

295.0

3.7
1.7
6.1
-.4

4.4
1.5
5.4
-.8

4.5
1.6
4.3
-.6

243.3

280.5

304.8

246.5

274.7

304.4

-1.6
3.7
1.7
2.3
2.5

-2.4
4.4
1.5
-.4
7.4

-2.0
4.5
1.6
-.2
5.1

255.1

285.2

313.4

EXPENDITURES
Total budget outlays
Lending and financial transactions
Government contribution for employee retirement (grossing). __
Other netting and grossing
Defense timing adjustment
Other
"_'__
Federal sector, NIA expenditures

SPECIAL ANALYSES

Lending and financial transactions.—Conceptually, the national income accounts measure all the Nation's current income and production, and therefore do not include transactions—such as loans—that
are an exchange of financial assets rather than income or production.
Loan transactions have a significant economic impact, affecting income
and output, but they are best analyzed as part of monetary rather
than fiscal policy. Special Analysis C (Borrowing, Debt, and Investment) and Special Analysis E (Federal Credit Programs) both contribute to knowledge of the financial market implications of the
budget.
Most of the lending and financial transactions shown in table A-5
are detailed in Special Analysis E. However, this total differs from
the total for direct loans shown in Special Analysis E because: (a)
The NIA counts nonrecourse agricultural commodity loans as purchases rather than loans, and (b) capital contributions to International Financial Institutions, while not technically loans, are excluded
from the NIA and treated as financial transactions.
Government contribution jor employee retirement.—The contributions
of Government agencies to the retirement trust funds of their employees are deducted from total budget expenditures since these
contributions are intragovernmental transactions. However, the NIA
considers Government payments for employee retirement to be part
of the compensation paid to Government employees; this helps maintain comparability with the treatment of employee retirement contributions in the rest of the economy. This includes contributions by
the Postal Service even though the Postal Service is not part of the
budget. Therefore the Federal sector includes these payments as
expenditures for purchases of goods and services or as part of enterprise
surpluses or deficits, and includes the receipt of these same payments
as being contributions for social insurance. Since receipts and expenditures are equally affected, this treatment has no impact on the
surplus or deficit. Over 75% of these payments go to the civil service
retirement fund and most of the remainder are for Federal employees
insured under social security.
Other netting and grossing.—The budget normally counts as receipts
only income from taxation or similar sources that arises from the exercise of governmental power to compel payment. Money received in
the course of business-type transactions, therefore, is normally shown
as offsets against expenditures. For instance, receipts from two major
insurance programs operated by the Veterans Administration (National Service Life Insurance and U.S. Government Life Insurance)
are netted against expenditures in the budget since these programs
are voluntary, commercial-type activities. However, in the NIA
these insurance premiums are treated as receipts in the same way as
receipts from compulsory Government insurance programs. Adjustments of this type affect total receipts and expenditures equally and
thus do not alter the surplus or deficit of either the budget or the
Federal sector. The decline in 1974 is due to the elimination of a
grossing transaction in the Commodity Credit Corporation which
used to add about $0.4 billion to indirect business taxes and subsidies.

540-700 O - 7 4 - 2

THE BUDGET FOR FISCAL YEAR 1975

Timing adjustments.—The budget records receipts at the time the
cash is collected regardless of when the income is earned; expenditures
(except interest) are generally recorded at the time the checks are
issued. The NIA attempts to record most receipts from the business
sector in the time period in which the income is earned rather than
when taxes are actually paid; personal income taxes, however, are
recorded at the time of payment by the individual taxpayer. For
instance, corporate income taxes in the NIA are recorded as taxes
when the profits are earned (accrued) regardless of when the cash is
received by the Treasury.
The principal timing adjustment on the expenditures side is for
defense purchases. Procurement items (such as missiles or airplanes)
are recorded in the Federal sector as defense purchases at the time of
delivery to the Federal Government rather than when they are fabricated or when they are paid for; work in process is counted as part of
private business inventories until the articles are completed and delivered to the Government. Both the budget and the Federal sector
record public debt interest when it accrues.
Other.—This category includes some miscellaneous adjustments,
largely for certain specialized aspects of the national income accounts,
such as the purchase and sale of land and rent on Outer Continental
Shelf lands, which are included in the budget but not in the national
income accounts. Certain nondefense timing adjustments are included
here because of the difficulty in separating them from other adjustment categories. It also includes adjustments for certain foreign currency transactions which are not included in the budget, and transactions of Federal agencies or activities which are excluded from the
budget but included in the Federal sector NIA. In 1974 it also includes
the one-time equivalent of $2.2 billion in rupees granted to India and
included as foreign transfer payments. Even though this $2.2 billion
of foreign currency transactions is recorded as foreign transfer payments in the standard accounting treatment in the NIA, there is no
real economic effect on either the United States or the Indian economy.
The currency was earned as part of our agricultural export program
over a period of many years, was not convertible to any other currency, and was greatly in excess of U.S. official needs for which it
could be spent. The economic impact on the U.S. economy occurred
when the food was produced and exported; the impact on the Indian
economy occurred when the food was imported and consumed.

Table A-6. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1964-75 (in billions of

dollars)

Actual
Description

1964

1965

1966

1967

1968

Estimate
1969

1970

1971

1972

1973

1974

1975

RECEIPTS, NATIONAL INCOME BASIS

Personal taxes and nontaxes
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance

50.7
25.7
15.6
23.5

51.3
27.7
16.9
24.6

57.6
31.0
15.7
28.5

64.5
31.2
15.8
35.7

71.4
33.7
17.1
38.3

90.0
37.4
18.6
44.4

93.6
33.3
19.2
49.1

87.4
32.2
20.1
52.9

100.1
34.7
19.9
59.0

107.2
43.8
20.9
71.4

123.7
50.3
23.3
83.2

135.3
50.2
27.5
91.8

115.5

120.5

132.8

147.2

160.6

190.4

195.2

192.6

213.7

243.3

280.5

304.8

65.7
(50.9)
(14.7)
29.5
(27.3)
(2.2)
9.8
8.1

64.4
(48.9)
(15.5)
30.5
(28.3)
(2.2)
10.9
8.5

71.7
(54.4)
(17.3)
34.2
(31.8)
(2.3)
12.7
9.0

85.3
(67.7)
(17.6)
39.4
(37.2)
(2.2)
14.8
9.9

94.9
(75.9)
(18.9)
44.8
(42.7)
(2.1)
17.8
10.9

99.4
(78.0)
(21.4)
50.7
(48.5)
(2.2)
19.2
12.3

98.0
(77.0)
(21.0)
56.8
(54.8)
(2.0)
22.6
14.0

95.9
(73.2)
(22.8)
69.7
(67.4)
(2.3)
26.8
14.3

103.2
(73.9)
(29.3)
78.6
(75.8)
(2.8)
32.9
13.4

111.5
104.5
(73.9) (75.3)
(30.6) (36.2)
89.4
107.2
(86.8) (102.5)
(2.6)
(4.7)
40.4
44.1
14.4
18.2

121.6
(82.0)
(39.6)
123.5
(120.7)
(2.8)
46.6
19.6

3.8

4.1

4.5

5.1

4.1

4.7
1

5.8
.1

5.2

6.4

4.2

2.1

Total expenditures, national income
basis

116.9

118.5

131.9

154.5

172.5

185.7

195.9

212.6

233.2

255.1

285.2

313.4

Excess of receipts (+) or expenditures (—),
national income basis

-1.4

+2.0

+.9

-7.3

-11.9

+4.7

-.7

-19.9

-19.5

-11.8

-4.7

-8.6

Total receipts, national income basis
EXPENDITURES,

NATIONAL
BASIS

INCOME

Purchases of goods and services
Defense
Nondefense
Transfer payments
Domestic ("to persons")
Foreign
Grants-in-aid to State and local governments. _
Net interest paid
Subsidies less current surplus of Government
enterprises
Wage accruals less disbursements

Source.—Actual data for 1964-73 are based on the estimates prepared by the Department of Commerce. Data for 1974 and 1975 are based on estimates
by the Office of Management and Budget in cooperation with the Department of Commerce.

SPECIAL ANALYSIS B
FUNDS IN THE BUDGET

This analysis classifies budget information by the groups of funds
which comprise the budget. It also presents information on the nature
of receipts for the largest trust funds.
DISTRIBUTION OF TOTALS, BY FUND GROUPS

Table B-l shows the distribution of total budget receipts and outlays
between the Federal funds and the trust funds. The two groups together, after deducting for transactions that flow between them, make
up the budget totals.
Table B-1. BUDGET RECEIPTS AND OUTLAYS, BY FUND GROUP
(in millions of dollars)
Description

1973
actual

1974
estimate

1975
estimate

RECEIPTS

Federal funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies

Receipts, trust funds
Interfund transactions
Total budget receipts

212,821
-1,218
-8,648
—197

161,357

185,581

202,757

95,532
-816
—2,523

110,836
-993
—3,433
—861

121,723
-1,109
—4,058
—737

105,548

115,818

-21,325

Trust funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies

196,422
-1,203
-9,464
—174

92,193

Receipts, Federal funds

169,831
-1,172
-7,179
—123

-21,129

-23,575

232,225

270,000

295,000

194,878
-1,172
-7,179
—123

214,555
-1,203
-9,464
—174

230,699
-1,218
- 8 , 648
—197

186,403

203,715

220,636

84,786
-816
—2,523

97,363
-993
—3,433
—861

113,289
-1,109
—4,058
—737

81,447

92,075

107,385

-21,325

-21,129

-23,575

246,526

274,660

304,445

-14,301

-4,660

-9,445

OUTLAYS

Federal funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Outlays, Federal funds
Trust funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Outlays, trust funds
Interfund transactions
Total budget outlays
Budget deficit

SPECIAL ANALYSES

FEDERAL FUNDS

The Federal funds are derived mainly from taxes and borrowing.
Most of these funds are not restricted by law to any specific governmental purpose. There are four subgroups of Federal funds—the
general fund, special funds, public enterprise funds, and intragovernmental revolving and management funds.
Table B-2. FEDERAL FUND RECEIPTS AND OUTLAYS (in millions of dollars)
Description

1973

1974

1975
stimate

RECEIPTS BY SOURCE
Individual income taxes
Corporation income taxes
Excise taxes _
Estate and gift taxes. _
Customs duties
Miscellaneous receipts .

103,246
36,153
9,836
4,917
3,188
4,018

129,000
48,000
10,653
6,000
3,800
5,304

185,581

202,757

538
182
49

656
212
112

733
309
121

2,548
1,519
10,046
1,377
73,307
1,700
26,661
3,592
-2,248
1,531
3,432
574
2,747
32,742
2,393
1,114
468
3,314
11,877
6,938

3,456
1,309
9,318
1,520
78,388
1,606
32,335
4,983
-3,872
1,938
2,986
739
3,182

13,039
7,870
300

3,756
809
9,192
1,708
84,600
1,628
36,112
5,550
-2,717
2,106
2,941
788
3,034
37,784
2,886
3,991
-883
3,272
13,364
7,992
1,561

186,403

Total receipts Federal funds

118,000
43.000
10,292
5,400
3,500
5,389

161,357

203,715

220,636

-25,046

-18,133

-17,878

OUTLAYS BY AGENCY
Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
Foreign assistance.
Other
Agriculture
Commerce
Defense—Military i
Defense—Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice.
Labor
State
_
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration.
Veterans Administration
Other independent agencies
Allowances2

Total outlays Federal funds
Excess of outlays ( - ) . .

35,879
2,328
2,559
-306
3,177

1
Includes allowances for All-Volunteer Force, military retirement systems reform, and civilian and
military pay raises for Department of Defense.
2
Includes allowances for acceleration of energy research and development, civilian agency pay

Receipts and outlays.—The receipts of the general and special funds
in 1975 are estimated at $202.8 billion, as presented in table B-2. Outlays of all the Federal funds, estimated at $220.6 billion, are distributed

THE BUDGET FOR FIS€AL YEAR 19 75

as shown. The proprietary receipts of the general fund and special
funds, the Federal intrafund receipts, and the receipts of the public
enterprise funds and the intragovernmental funds, have all been offset
in arriving at the outlays for each agency.
Obligations.—The obligations (net) for Federal funds are estimated
at $226.8 billion for 1975, as set forth in table B-3. These transactions
largely flow from the budget authority of $322.1 billion for the year,
although in part the obligations were authorized by prior years'
budget authority.
Table B-3. OBLIGATIONS INCURRED, NET, IN FEDERAL FUNDS
(in millions of dollars)
Department or other u«it

Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
International security assistance
International development assistance
Other
Agriculture
Commerce
Defense—Military!
Defense-Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
.__
Atomic Energy Commission
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Civil Service Commission
Federal Home Loan Bank Board
Postal Service
Railroad Retirement Board
Other independent agencies
Allowances2
Total

1973
actual

1974
estimate

1975
estimate

551
184
85
_

685
213
109

717
310
101

1, 382
1,799
1,697
9,379
1,708
76,382
1,817
29,095
5,157
-2,044
1,870
3,634
632
3,377
32,767
2,385
3,441
385
3, 134
11,931
1,979
-317
2,129
22
4,124

3,030
2,347
1,730
7,581
1,615
85,261
1,916
37,476
5,334
-3,644
1,953
2,811
716
3,658
35,904
2,887
4,521
-359
3,486
13,117
2,587
-316
1,999
22
4,211
400

1, 037
1,933
589
9,557
1,704
90,949
1,736
35,570
3,789
-2,704
2,125
2,999
807
3,540
37,808
3,058
5,149
-919
3,275
13,464
3,180
-335
1,553
4
3,601
2,184

198,683

221,253

226,779

Balances of prior authority.—Table B-4 shows the balances of budget
authority carried forward in Federal funds at the end of each fiscal
year. To the extent that valid Government obligations have been
incurred and remain unpaid, amounts sufficient to pay them may be
carried over into the next year. Unobligated balances may be carried
forward in accordance with specific provisions of law, usually in order
to permit completion of projects as contemplated at the time the

SPECIAL ANALYSES

appropriations were first made, but also to provide funding for
activities of a continuing nature (such as business-type enterprises) or
for standby emergency purposes (such as backup for insurance of the
Federal Deposit Insurance Corporation).
Table B-4. FEDERAL FUND BALANCES OF BUDGET
(in millions of dollars)
Start 1973
'othe^unit

Legislative branch
The Judiciary
Executive Office of the
President
Funds appropriated to the
President:
International security
assistance
International development assistance
Other
Agriculture
Commerce
._ __
Defense—Military i
Defense-Civil
Health, Education, and
Welfare
Housing and Urban Development..
_ __ __
Interior
Justice
Labor
State
Transportation
Treasury
Atomic Energy Commission
Environmental Protection
Agency
General Services Administration
National Aeronautics and
Space Administration. _ _
Veterans Administration. _
Civil Service Commission.
Federal Deposit Insurance
Corporation
Federal Home Loan Bank
Board. _ ___ _ . .
Postal Service
Other independent agencies
Allowances2
Total

Obligated

End 1973

Unobligated

Obligated

AUTHORITY

End 1974

Unobligated

Obligated

End 1975

Unobligated

156
*

Obligated

57
16

149
*

69
18

188
*

98
19

82
20

2,124

1,991

3,257

Unobligated

2,805

3,785 9,158 4,520 8,871 6,525 9,809 6,478
1,818
27 1,964
80 2,237
- 6 8 1,342
6,947
1,557 5,188 3,106 3,451 6,992 3,830
1,320
278 1,660
350 1,755
254 1,751
23,997 11,836 26,933 12,643 33,806 10,020 40,155
412
222
527
380
836
130
944
9,959

1,007 12,156

1,404 17,262

719 16,720

8,666 13,214 10,233 12,818 10,583 12,307
1,012
625 1,209
656 1,438
467
819
204 1,150
103 1,165
64
1,530
423 1,696
485 1,496
347
73
16
126
40
102
52
1,335 2,791 1,959 1,724 2,435 3,552
186
38
209
41
234
11

8,822
1,451
1,183
1,554
122
2,941
258

1,117

250

1,110

498

1,668

1,534

4,355

5,467

6,317

5,500

505

254

420

380

368

9,862
184
11,351
277
9,873
11
361

1,840

2,028

149

15,123
530
77
348
82
2,175
13

7,476

995

332

153

21
7
250
066 2, 1 6
2
1
7
4

516
1,090
1,109 2,243
5
1
8

1,399
69
1,187 2,458
14
5

1,401
1,287
1
5

38
2,531
4

3,000

41 7,545
1,355 10,216

-26
1,940

7,854
9,498

-17

8,169

-18

8,503

2,148

2,646

4,656

3,275
100

3,012

3,284
723

2,449

73,612 71,084 84,311 77,022 101,047 67,125 106,817

68,089

4,352

1
Includes balances of allowances for All-Volunteer Force, military retirement systems reform,
and civilian and military pay raises for Department of Defense.
2
Includes allowances for acceleration of energy research and development, civilian agency pay

"Less than $500 thousand.

THE BUDGET FOR FTSCAL YEAR 19 75

PUBLIC ENTERPRISE

FUNDS

The public enterprise funds are a subgroup of Federal funds, and
data thereon are included on a net basis in tables B-2 through B-4.
The public enterprise funds carry on a cycle of business-type operations, primarily with the public, on behalf of the Government. Some
are incorporated enterprises; others are unincorporated. The general
fund usually supplies them with capital, although in a few cases they
may borrow from the public.
Table B-5. PUBLIC ENTERPRISE FUND TRANSACTIONS
(in millions of dollars)
Applicable receipts
Description

Funds appropriated to the President:
Foreign assistance
Other
Agriculture:
Commodity Credit Corporation1
Farmers Home Administration
Other
Commerce
Defense:
Military
Civil (Panama Canal Company)_.._
Health, Education, and Welfare
Housing and Urban Development:
Government
National
Mortgage
Association
Urban renewal fund
Low-rent public housing fund
Federal Housing Administration
Other
Interior
Transportation
Treasury
Environmental Protection Agency
General Services Administration
Veterans Administration
Other independent agencies:
Emergency Loan Guarantee Board
Farm Credit Administration
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation
Revolving fund
National Credit Union Administration
Postal Service 2
Small Business Administration
Tennessee Valley Authority
Total
Receipts from the public
Receipts from other accounts

1973
actual

1974
estimate

Gross outlays

1975
estimate

1973
actual

1974
estimate

1975
estimate

250
82

465
152

852
65

739
151

343
19

743
16

5,982
4,710
47
48

4,659
5,546
47
66

3,757
6,456
48
78

9,471
4,412
64
21

5,950
5,908
43
32

4,455
6,160
52
40

26
200
48

41
213
88

16
241
97

24
198
106

64
224
204

33
246
220

3,036
831
648
1,192
256
53
29
1
1
2
1,170

2,486
1,054
708
1,176
271
52
27
2
1
3
1,060

4,805 2,057
882 1,823
658
635
1,461 2,024
289
281
58
126
29
440
2
*
1
1
,
3
1
1,003
719

2,233
2,179
708
2,262
299
151
514
1
1
2
773

4,632
1,982
658
2,430
292
139
730
2
1
2
787

4
6

5
6

3
6

1
6

—1
6

*
6

326
28

375
32

393
35

71
31

40
39

48
43

23
9,964
411
809

12
10,121
585 1,708
1,191 1,176

1,267
1,447

1,030
1,649

30,185

544
1,027
20,132

23,042 36,419

24,725

26,411

(26,086) (18,347) (20,727)
(4,099) (1,785) (2,315)

1
Receipts include advances from foreign assistance and special export programs of $895 million in
1973, $554 million in 1974, and $778 million in 1975.
3
Receipts include payments from the general fund of $1,410 million in 1973.
"Less than $500 thousand.

SPECIAL ANALYSES

Receipts and outlays.—Receipts of public enterprise funds are
estimated at $23.0 billion in 1975, and gross outlays are planned to
total $26.4 billion (table B-5), resulting in net outlays of $3.4
billion.
TRUST FUNDS

The trust funds are collected and used for specific purposes; in
this sense, they are administered in a fiduciary capacity by the
Government. They include one subgroup, trust revolving funds, which,
like the public enterprise funds, carry on a businesslike cycle of operations and are normally stated on a net basis (outlays less receipts).
Cash operations.—Trust fund receipts are estimated at $115.8 billion
in 1975, with outlays planned at $107.4 billion, as shown in table B-6.
The transactions of the Federal old-age and survivors and disability
insurance funds are far larger than any other trust funds.
Table B-6. OUTLAYS AND RECEIPTS OF TRUST FUNDS
(in millions of dollars)
Outlays
Description

Federal old-age and survivors and disability insurance trust funds _
_
Health insurance trust funds
State and local government fiscal assistance trust fund
Unemployment trust fund
Railroad employees retirement funds._
Federal employees retirement funds...
Airport and airway trust funds
Highway trust funds
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds
Subtotal
Intrafund transactions
Proprietary receipts from the public...
Receipts from off-budget
Federal
agencies
Total

1973
actual

Receipts

1974
1975
estimate estimate

1973
actual

1974
1975
estimate estimate

49,090
9,479

56,235
12,180

65,088
14,191

49,585
11,254

59,321
15,477

66,266
16,714

6,636
5,354
2,445
4,555
699
4,811
1,396
585
424
-689

6,147
5,850
2,684
5,989
572
4,697
2,454
678
638
-763

6,174
7,166
3,004
7,291
1,959
4,890
3,100
697
546
-815

8,295
6,691
2,277
7,646
832
5,912
1,730
837
474

6,055
6,910
2,600
9,226
851
6,376
2,615
850
555

6,205
6,756
3,019
10,072
1,773
6,305
3,250
876
487

84,786
-816
-2,523

97,363
-993
-3,433

113,289
-1,109
-4,058

95,532
-816
-2,523

110,836
-993
-3,433

121,723
-1,109
-4,058

-861

-737

-861

-737

92,075

107,385

105,548

115,818

81,447

92,193

In fiscal years 1973-1975, this group of funds has excesses of receipts of the following amounts (in millions of dollars):
Total receipts, trust funds
Total outlays, trust funds
Excess of receipts, trust funds

1973
actual
92,193
81,447

1974
estimate
105,548
92,075

1975
estimate
115,818
107,385

10, 746

13,473

8,433

THE BUDGET FOR FISCAL YEAR 19 75

Receipts by funds.—Table B-7 presents information classifying
the trust fund receipts by major fund, and by source for each such
fund.
Table B-7. TRUST FUND RECEIPTS (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

Federal old-age, survivors, and disability insurance trust funds:
Social insurance taxes and contributions
Interest on Federal securities
Federal payment as employer for employee retirement
Other (mainly receipts of special Federal payments)
Proposed legislation

1973
actual

1974
estimate

1975
estimate

46,084
2,283
695
524

55,584
2,477
764
496

62, 321
2,607
828
499
11

49,585

59,321

66,266

9,030
239
121
1,864

12,423
397
147
2,510

13,148
565
150
2,851

11,254

15,477

16,714

State and local government fiscal assistance trust fund:
Deposits for General Revenue Sharing

8,295

6,055

6,205

Unemployment trust fund:
Social insurance taxes and contributions.
Interest on Federal securities
Other receipts

6,198
487
6

6,198
708
5

5,975
775
6

Subtotal Unemployment trust fund.

6,691

6,910

6,756

1,340
25
6
97
7
1
9

1,436
25
6
1,082

Subtotal Federal old-age, survivors, and disability insurance
trust funds
Health insurance trust funds:
Social insurance taxes and contributions
Interest on Federal securities
Federal payment as employer for employee retirement
Other (mainly receipts of special Federal payments)
Subtotal Health insurance trust funds

Railroad employees retirement funds:
Social insurance taxes and contributions
Interest on Federal securities
Receipts from other trust funds
Other (mainly receipts of special Federal payments).
Proposed legislation
Subtotal Railroad employees retirement funds
Federal employees retirement funds:
Social insurance taxes and contributions
Interest on Federal securities
........
Federal payment as employer for employee retirement (including
payment on prior year liabilities):
Agencies included in budget
Agencies excluded from budget
Other receipts
Proposed legislation
Subtotal Federal employees retirement funds
Airport and airway trust fund:
Excise taxes___v
Special Federal payment
Proposed legislation: Federal payment.
Subtotal Airport and airway trust fund.

,189
24
6
82
0
22

238
2,277

2,600

3,019

2,186
1,570

2,361
1,819

2,483
2,037

3,885

3,881
861
11
292

4,793
737
22

7,646

9,226

10,072

758
73

81
5

91
5

82
3

81
5

822
1,773

SPECIAL ANALYSES

Table B-7. TRUST FUND RECEIPTS (in millions of dollars)—Continued
[Amounts under proposed legislation are shown separately]
Description

1973
actual

Highway trust funds:
Excise taxes
Interest on Federal securities

Other trust funds (nonrevolving)
Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Total receipts

6,376

6,305

2,615

3,250

340
.

5,840
465

1,730

Veterans life insurance trust funds:
Interest on Federal securities

6,001
375

5,912

Foreign military sales trust fund

Subtotal Veterans life insurance trust funds

1975
estimate

5,665
247

Subtotal Highway trust funds

Other receipts

1974
estimate

370

406

497

479

470

837

850

876

474

555

487

95,532
—816
—2, 523

110,836
—993
—3,433
—861

121,723
—1,109
—4,058
—737

92,193

105,548

115,818

Outlays by funds.—Corresponding information on outlays, classify
ing the data for the larger funds, is found in table B-8*

THE BUDGET FOR FISCAL YEAR

1975

Table B-8. T R U S T FUND OUTLAYS (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

1973
actual

Federal old-age, survivors, and disability insurance trust funds:
Benefit payments
Payments to other trust funds
Administrative expenses and other
Proposed legislation

1974
estimate

1975
estimate

47,332
802
956

Subtotal Health insurance trust funds
State and local government fiscal assistance trust fund:
Payments for General Revenue Sharing
Unemployment trust fund:
Withdrawals for benefit payments
Repayment of advances to the general fund_
Administrative expenses and other

63,264
1,082
1,087
—345

49,090

56,235

65,088

9,039
440

11,431
749

13,417
774

9,479

Subtotal Federal old-age, survivors, and disability insurance
trust funds
__
Health insurance trust funds:
Benefit payments
Administrative expenses and other

54,298
977
960

12,180

14,191

6,63C

6,147

6,174

4,478

4,722
250
878

6,19^
6jj
90°

5,354

5,850

7,166

2,419
26

2,657
26
1

2,775
31
198

2,445

2,684

3» 004

4,346
201
8

5,734
246
9

6,990
291
10

4,555

5,989

7,291

699

572

681
1» 278

Subtotal Airport and airway trust fund

699

572

1,959

Highway trust funds:
Current programs (mainly grants to States)
Proposed legislation

4,811

4,696
1

4,881
8

4,811

4,697

4,890

1,396
585
424
-689

2,454
678
638
-763

3,100
697
546
-815

84,786
-816
-2,523

97,363
-993
-3,433
—861

113,289
-1,109
-4,058
—737

81,447

92,075

107,385

876

Subtotal Unemployment trust fund
Railroad employees retirement funds:
Benefit payments and claims
Administrative expenses and other
Proposed legislation

Subtotal Railroad employees retirement funds
Federal employees retirement:
Benefit payments and claims
Refunds to former employees.
Administrative expenses and other
Subtotal Federal employees retirement
Airport and airway trust fund:
Current programs
Proposed legislation

Subtotal Highway trust funds
Foreign military sales trust fund
Veterans life insurance trust funds
Other trust funds (nonrevolving)
Trust revolving funds
Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Total outlays

SPECIAL ANALYSES

Balances of the trust funds.—The balances of the trust funds continue
to increase, as shown in the following end-of-year figures (in millions
of dollars):
1972
actual

Open book balances
Investments in U.S. securities:
Public debt
Agency debt

Total

1973
actual

6,232

5,932

1974
estimate

5.329

1975
estimate

5,261

102,467 113,512 127.588 136,090
1,340
1,340
1,340
1,340
110.039 120,784 134,257 142,691

A summary of the balances by fund is presented in table B-9. The
amounts include both open-book balances with Treasury and investments in U.S. securities. Part of the balances is obligated, part unobligated. The balances on an authorization basis exceed the cash
balances because for a few accounts budget authority is not the same
as receipts; these differences are listed in the note appended to the
table.
Table B-9. TRUST FUND BALANCES (in millions of dollars)
As of June 30

Description
1972
actual

Federal old-age, survivors, and disability insurance
trust funds
Health insurance trust funds
State and local government fiscal assistance trust fund
Unemployment trust fund
Railroad retirement accounts
Federal employees retirement funds
Airport and airway trust fund
Highway trust funds
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds
__
Total

1973
actual

43,805
3,339

44,300
5,114
1,658
11,099
4,631
31,157
1,191
5,590
70
1
7,448
68
6
7,216

9,807
4, 755
28,066
1,058
4,489
377
7,196
619
6,527
110,039

1974
estimate

120,784

47,385
8,411
1,566
12,155
4,552
34,395
1,470
7,269
81
7
7,620
55
8
7,979
134,257

1975
estimate

48,564
10,934
1,597
11,745
4,568
37,176
1,284
8,685
1,021
7,798
56
2
8,794
142,691

Note.—The balances shown here cover the amounts on deposit with Treasury, and the U.S. securities held. In addition, certain funds have authority to obligate in advance of receiving moneys,
and to borrow from the public. The reconciliation is as follows:
1972

Balance available on an authorization basis
Unfinanced contract authority:
Airport and airway trust fund
Highway trust funds
Foreign military sales trust fund
Other___
Unappropriated receipts:
Available as needed, on an indefinite basis
Available for appropriation by Congress:
Soldiers' Home permanent fund
Airport and airway trust fund
Highway trust funds
Retained as permanent endowment
Balance available on a cash basis
•Less than $500 thousand.

1973

1974

1975

125,061

132,356

151,665

161.32 2

-688
-14,734
-4,299
-2

-1,208
-10,119
-6,204
-10

—958
-17,445
-7,248

-678
-19,256
-8,093
_
_

105
227
4,370
6

98
578
5,283
6

93
917
7,213
6

89
678
8,607
6

110,039

120,784

134,257

142,691

THE BUDGET FOR FISCAL YEAR

1975

For 1975, as in many recent years, the largest net investments are
expected to be those of the trust funds established by the Social
Security Act as amended.
Trust revolving funds.—The activities of the trust revolving fund
subgroup are shown in table B-10. The largest of these funds are
those used by the Civil Service Commission to buy insurance for
Government employees.
Table B-10. TRUST REVOLVING FUND TRANSACTIONS (in millions of dollars)
Applicable receipts

Description

1973
actual

Civil Service Commission (employees' life insurance and
health benefits)
Federal Deposit Insurance Corporation
All other trust revolving funds..
Total trust
funds1

Gross outlays

1975
estimate

1973
actual

1974
estimate

1,948

2,124

2,386

1,815

1,907

2,134

590
156

577
166

605
175

52
138

19
178

40
177

2,694

2,867

3,166

2,005

2,104

2,351

(1,751)
(943)

(1,806)
(1,061)

(2,017)
(1,148)

Excludes right-of-way revolving fund which is a part of the highway trust funds.

1975
estimate

revolving

Receipts from the public
Receipts from other accounts.. _
1

1974
estimate

SPECIAL ANALYSIS C
BORROWING, DEBT, AND INVESTMENT

The major fiscal responsibilities of the Federal Government include
not only taxation and expenditure but also:
• The borrowing of cash to meet current requirements not covered
by receipts and to refinance maturing debt;
• The investment of balances that trust funds and other Government accounts do not currently need for outlays; and
• The provision of assistance, including Government guarantees,
for certain non-Federal borrowing.
This analysis summarizes current developments in Federal borrowing. It also discusses the size and growth of the Federal debt
and the interest on the Federal debt, agency investment in U.S. Government securities, the statutory debt limitation, and borrowing by
Government-sponsored enterprises. The analysis concludes with a
brief discussion of the trend in Federal and federally assisted borrowing
and the relationship of this trend to total funds raised by nonfinancial
sectors in the economy. Excluded from this analysis are other types
of Federal liabilities such as accounts payable, obligations for undelivered orders, long-term contracts, insurance commitments, and
the obligation for future payments of social security and military
retirement.
Special Analysis E examines the related subject of Federal credit
programs, including direct loans, loans by Government-sponsored
enterprises, and Government-guaranteed loans. The factors discussed
in both Special Analyses C and E are significant in appraising the impact on financial markets of the programs contained in the 1975
Federal budget.
BORROWING AND REPAYING DEBT

The Federal Government borrows for two principal reasons. First,
it sells debt to the public in order to finance budget deficits. Second, it
sells debt to the Government agencies that accumulate surpluses in
separate funds, primarily trust funds, required by law to be invested
in Federal securities. Most Federal debt has been issued by the
Treasury and is called "public debt," but a small portion has been
issued by certain Government agencies and is called "agency debt." 1
The gross Federal debt includes debt held by both the public and
the agencies. Since Treasury borrowing from the agencies is an internal
transaction between two funds both within the Government itself,
only borrowing from the public affects the volume of securities sold
1
The term "agency debt" is defined more narrowly in the budget than in the securities market,
where it may include not only the debt of the Government agencies listed in table C-5 but also
the dtbt of other issuers such as the Government-sponsored enterprises listed in table C-8.

THE BUDGET FOR FISCAL YEAR 1975

in the financial markets, the size and composition of assets held by
the private sector, and the taxes required to pay interest on the
Federal debt.
Borrowing from the public—whether by the Treasury or by an
agency—has a significant impact on financial markets and thereby
on the economy, and it is consequently an important concern of
Federal fiscal policy. For many purposes the borrowing from the
public exclusive of the Federal Reserve System is even more important
than borrowing from the public as a whole. Federal Reserve purchases
of debt expand bank reserves and the money supply and thus have a
markedly different effect on financial markets than do purchases by
other sectors of the public. Moreover, almost all interest received by
the Federal Reserve System is returned to the Treasury as a receipt,
called a deposit of earnings, so the net cost to the Government of
Federal Reserve purchases of debt is very small. However, the debt
held by the public exclusive of the Federal Reserve System is not
estimated in this analysis for future periods. Federal Reserve purchases and sales of debt are undertaken for monetary policy purposes
and thus depend on future economic developments and on policy
decisions not yet made.
Table C-l summarizes Federal borrowing from 1973 through 1975.
In 1973 the total Federal borrowing (net of the refunding of
securities)—i.e., the rise in gross Federal debt—was $31.1 billion.
The borrowing from Government agencies was $11.8 billion, and the
borrowing from the public was $19.3 billion. Of the amount borrowed
from the public, $3.8 billion was borrowed from the Federal Reserve
System and $15.5 billion was borrowed from other lenders, which
Table C-l. CHANGES IN FEDERAL DEBT (in millions of dollars)
Description

Increase or decrease ( —)
1973
actual

1974
estimate

1975
estimate

Debt outstanding
end 1975
estimate

Gross Federal debt:
Public debt (issued by Treasury)
Agency debt (issued by agencies)

30,881
216

16,319
1,606

19,797
1,826

493,433
14,540

Gross Federal debt 1 .

31,097

17,924

21,623

507,973

11,925
-104

14,494
-69

9,141
-18

147,020
1,909

Debt held by Government agencies

11,822

14,424

9,123

148,929

Total, debt held by the public

19,275

3,500

12,500

359,045

Composed of:
Debt held by the Federal Reserve System
Debt held by others

3,756
15,519

NA
NA

Less debt held by Government agencies:
Public debt
Agency debt.__.

NA= Not available.
Excludes the $825 million of special non-interest-bearing notes issued to the International
Monetary Fund.
1

SPECIAL ANALYSES

comprise commercial banks, foreign central banks, other financial
institutions, and individuals. Borrowing from the public is expected
to be $3.5 billion in 1974 and $12.5 billion in 1975. By the end of
1975 gross Federal debt is expected to be $508.0 billion, with 71%
held by the public (including the Federal Reserve System) and the
remaining 29% by the agencies. Ninety-seven percent of the gross
Federal debt will have been issued by the Treasury.
Until recently the Federal debt has been held almost entirely by
domestic individuals and institutions. After World War II the public
debt held in foreign balances and international accounts 2 tended to
grow gradually and by the end of 1969 amounted to $10 billion.
However, due to international monetary developments, in 1970 the
foreign and international holdings began to grow much faster, and
by the end of 1973 they had risen to $59 billion. Most of the public
debt held abroad is owned by foreign central banks. The annual
borrowing from abroad is shown below for 1968-73 in comparison
with the annual borrowing from the domestic public, exclusive of
the Federal Reserve System (in billions of dollars):
Foreign and international *
Domestic (excluding Federal Reserve
System)
Total borrowing from the public
(excluding Federal Reserve System)..
_

1968
-0.7

1969
-0.4

1970
3.7

1971
17.9

1972
17.3

1973
10.2

18.3

-12.6

-1.9

-6.3

-3.8

5.3

17.6

-13.0

1.8

11.6

13.5

15.5

1
Public debt only, and exclusive of the special non-interest-bearing notes issued to the International Monetary Fund and international lending agencies.

As this table suggests, until 1970 the total borrowing from the public
and the domestic borrowing from the public were about the same. In
1970, however, total borrowing was modestly larger than domestic
borrowing; and in 1971 and 1972 Government borrowing from abroad
was between $17 billion and $18 billion, which was several times higher
than ever before. Consequently, despite the Government's very large
borrowing from the public in 1971 and 1972, the amount of Federal
debt held by the domestic public (exclusive of the Federal Reserve
System) decreased in both these years. In 1973 the Government continued to borrow heavily, with about two-thirds of the additional
debt being bought by foreign holders.
The Federal borrowing in 1973 is not fully comparable to the
borrowing in other years. This is due to a procedural change made
by the Treasury Department in October 1972, which had the effect of
raising by about $4.5 billion the trust fund holdings of public debt
recorded at the end of each month. As a consequence, the gross Federal
debt and the debt recorded as held by Government agencies were
raised by about $4.5 billion at the end of 1973 and will continue to be
higher by this amount in subsequent years. In 1973, but in no other
2
The estimates of Federal debt held in foreign balances and international accounts do not include agency debt, the holdings of which are believed to be small. The data on public debt were
adjusted to exclude the special non-interest-bearing notes issued to the International Monetary
Fund and international lending agencies. These notes are not part of the gross Federal debt.

O - 74 - 3
540-700

THE BUDGET FOR FISCAL YEAR

1975

year, the recorded gross Federal borrowing was thereby increased by
about $4.5 billion and total lending by Government agencies to the
Treasury was similarly increased. The debt held by the public and
the borrowing from the public are not affected by this procedural,
nonrecurring change.
BORROWING AND GOVERNMENT DEFICITS

Table 0-2 shows how borrowing from the public is related to the
budget deficit. The deficit is financed either by borrowing from the
public or by several other means. These other means of financing the
budget deficit may be either positive, in which case they contribute to
the financing of the deficit; or negative, in which case they, like the
budget deficit, must themselves be financed. In 1973 the borrowing
from the public was $19.3 billion. The major part, $14.3 billion, was
used to finance the deficit. The remaining $5.0 billion was used to
finance the negative total for the other means of financing the deficit.
Table C-2. MEANS OF FINANCING THE FEDERAL BUDGET DEFICIT
(in millions of dollars)
1973
actual

1974
estimate

1975
estimate

Budget deficit

14,301

4,660

9,445

Means offinancingthe deficit:
Borrowing from the public

19,275

3,500

12,500

—846

3,000

-3,035
-886
400
-608

-126
-672
448
-2,709
1,219

-109
-830
705
-2,821

-4,974

1,160

-3,055

14,301

4,660

9,445

Other:
Decrease or increase (—) in cash and monetary assets
Increase or decrease (—) in liabilities for:
Checks outstanding, etc.1
Deposit fund balances
Seigniorage on coins
Outlays of off-budget Federal agencies ( - ) 2
Increment on gold

___

Subtotal, means offinancingother than borrowing from the
public
Total, means of

financing

1
Besides checks outstanding, includes military payment certificates, accrued interest (less unamortized discount) payable on public debt, and, as an offsetting change in assets, certain collections
in 2 transit.
The off-budget Federal agencies consist of the Rural electrification and telephone revolving
fund (as of May 12, 1973), Rural Telephone Bank (as of May 12, 1973), Environmental Financing
Authority. Export-Import Bank. Postal Service (as of July 1, 1973), and Federal Financing Bank
(for which data are not yet available).

SPECIAL ANALYSES

The means of financing the budget deficit other than borrowing
from the public are:
• A decrease in cash or monetary assets;
• An increase in monetary liabilities for checks outstanding, etc.;
• An increase in deposit fund balances, which are liabilities that
arise when the Federal Government temporarily holds money in a
deposit as an agent for someone else (such as State income taxes
withheld from Federal employees' salaries and not yet paid to the
States);
• Seigniorage, which is the face value of minted coins less the cost of
their production;
• The outlays of the off-budget Federal agencies, which enter with a
negative sign since they have to be financed by borrowing or other
means in the same way as does a budget deficit; and
• The increment on gold, which is the increase in the value of gold
assets of the United States in 1974 due to the change in the par
value of the dollar authorized by section 2 of the Par Value
Modification Act as amended by Public Law 93-110.
As the figures in table C-2 indicate, the extent to which the budget
deficit can be financed by means other than borrowing from the public
is limited. Consequently, the deficit and the borrowing from the
public tend to be closely related.
Borrowing from the agencies is related to the surpluses of the trust
funds, which, as shown in table C-6, own 92% of the Federal debt
held by Government agencies. The relationship between borrowing
from agencies and trust fund surpluses during 1973-75 can be seen by
comparing the purchase of Federal debt by the agencies, given in table
C-l, with the aggregate surplus of the trust funds. This was $10.7
billion in 1973 and is expected to be $13.5 billion in 1974 and $8.4
billion in 1975. The comparison for 1973 needs to take into account
that the recorded agency borrowing was raised by about $4.5 billion
due to the procedural change discussed above.
SIZE AND GROWTH OF FEDERAL DEBT

Gross Federal debt has risen substantially over most of the past four
decades, from about $16 billion in 1929 to $468.4 billion at the end of
1973. Table C-3 presents the detail of this change since 1954 and
shows that a sizable part of the increase is held in Federal Government
accounts (primarily trust funds) rather than being owed to the public.
From the end of 1954 to the end of 1973, gross Federal debt rose by
73% while Federal debt held by the public rose by 53%. Federal debt
held by the public apart from the Federal Reserve System rose still
less, by 34%—an annual compound rate of growth of 1.6% over the 19
years—because over this period the Federal Reserve System bought a
large quantity of Federal debt in the market, thereby expanding the
reserves of the banking system and providing for growth in the
Nation's money stock.

T H E BUDGET FOR FISCAL YEAR

1975

Table C-3. COMPARISON OF TRENDS IN FEDERAL DEBT AND GROSS
NATIONAL PRODUCT (in billions of dollars)
Debt outstanding, end of year
Held by
Fiscal year

Gross
Federal
debt i

Federal
Govern-

The public

270.8
274.4
272.8
272.4
279.7
287.8
290.9
292.9
303.3
310.8
316.8
323.2
329.5
341.3
369.8
367.1
382.6
409.5
437.3
468.4
486.4
508.0

46.3
47.8
50.5
52.9
53.3
52.8
53.7
54.3
54.9
56.3
59.2
61.5
64.8
73.8
79.1
87.7
97.7
105.1
113.6
125.4
139.8
148.9

Debt held
by public
as percent
of GNP

Federal

accounts

1954
_ __ _
1955 _
1956 __ .
1957 _
1958
1959
1960
1961
1962
1963
1964
_ _
1965
1966
1967 _
1968
1969. _
1970 _
1971 __
1972 2 __
1973 __
1974 estimate 2
1975 estimate 2
_

GNP

System

224.5
226.6
222.2
219.4
226.4
235.0
237.2
238.6
248.4
254.5
257.6
261.6
264.7
267.5
290.6
279.5
284.9
304.3
323.8
343.0
346.5
359.0

25.0
23.6
23.8
23.0
25.4
26.0
26.5
27.3
29.7
32.0
34.8
39.1
42.2
46.7
52.2
54.1
57.7
65.5
71.4
75.2

NA
NA

199.5
362.1
203.0
378.6
198.5
409.4
196.4
431.3
200.9
440.3
209.0
469.1
210.7
495.2
211.4
506.5
218.7
542.1
573.4
222.4
222.8
612.2
222.5
654.2
222.5
721.2
220.8
769.8
238.4
826.0
225.4
898.3
227.2
954.6
238.8 1 .012.5
252.3 ,100.0
267.9 1 ,220.0
NA 1 ,340.0
NA ,455.0

62.0
59.9
54.3
50.9
51.4
50.1
47.9
47.1
45.8
44.4
42.1
40.0
36.7
34.8
35.2
31.1
29.8
30.1
29.4
28.1
25.9
24.7

NA=Not available.
Excludes the special non-interest-bearing notes issued to the International Monetary Fund
and international lending agencies. These notes are included in the Treasury figures for total outstanding Federal debt.
2
The procedural change in the recording of trust fund holdings of public debt at the end of the
month increased gross Federal debt and the debt held in Federal Government accounts by about
$4.5 billion at the end of 1973 and subsequent years.
1

During the depression of the 1930's and during World War II,
Federal debt held by the public increased greatly, not only in absolute
amount but also, as shown in the following chart, as a proportion of
total net indebtedness: Federal, State and local, and private. Whereas
Federal debt held by the public was only 9% of total net debt at the
end of calendar year 1929, it had risen to 62% by the end of calendar
year 1945. Federal borrowing was large during these years, particularly
to finance World War II, and borrowing by other sectors was restricted
by low incomes and poor credit-worthiness during the depression and
by controls and scarcities during the war.

SPECIAL ANALYSES

Percent Distribution of Net Indebtedness
Percent
100

•Federal net indebtedness is the Federal debt held by the public (including the Federal Reserve System). Private net indebtedness includes the debt of the Government-sponsored enterprises, which are federally chartered but privately owned.

Since 1945, however, private debt has increased as a proportion of
total debt in every year but one, and in every single year the Federal
debt held by the public (including the Federal Reserve System) has
decreased as a proportion of the total. State and local government debt
has risen in amount every year and has risen in proportion to total debt
for the period as a whole. From the end of calendar year 1953 to the
end of 1972, Federal debt held by the public rose 50%, State and local
government debt rose 475%, and private debt rose 427%. By the end
of calendar year 1972, Federal debt held by the public was only 15% of
total debt. As a result of these trends, Federal debt and borrowing,
although still significant, have become relatively much smaller influences in the financial markets.
During this same period the Federal debt has decreased relative to
gross national product. As shown in table C-3, debt held by the public
equaled 62% of gross national product at the end of 1954 but declined
steadily to 30% by the end of 1970 and is expected to decline further
to 25% by the end of 1975.

THE BUDGET FOR FISCAL YEAR 19 75

The interest cost of the debt may be more significant than the
amount of the debt for some types of comparison designed to measure
the importance of Federal indebtedness. Interest on the debt held by
the public has risen much faster than the debt itself, due to a strong
upward tr°nd since World War II in the interest rates that must be
paid on new borrowings and on refunded debt. Between 1954 and 1973
the Federal debt held by the public grew 53%, but, as shown in table
C-4, the interest paid to the public more than tripled. For this period
as a whole, interest payments to the public grew faster than gross
national product. In the first 5 years, 1954-58, interest was equal to
1.40% of gross national product, whereas by the last 5 years, 1969-73,
the proportion had risen moderately to 1.57%. On the other hand,
the proportion of budget outlays devoted to paying interest on the
debt held by the public did not show any trend over the period as a
whole and fluctuated around an average of 7.7%.
Table C-4.—COMPARISON OF TRENDS IN INTEREST ON FEDERAL DEBT,
GROSS NATIONAL PRODUCT, AND BUDGET OUTLAYS (in billions of dollars)
Interest on the gross Federal debt
Interest on debt
held by the public
as a percent of

Pai<i to
Fiscal year

The public
Total

1954
1955 . .
1956
1957
1958
1959
1960
. . _
1961
1962
1963
1964
1965
1966_
1967
1968
1969
1970
1971
1972
1973
1974 estimate
1975 estimate

6.4
6.4
6.8
7.3
7.8
7.8
9.5
9.3
9.5
10.3
11.0
11.8
12.6
14.2
15.6
17.7
20.0
21.6
22.5
24.8
29.8
31.3

Federal
Government
accounts

?
3
.4
.4
.4
5
.5
6
6
1.8
1.9
2.1
2.5

3.0
3.5
4.4
5.3
5.8
6.3

7.4
8.1

Total

5.2
5.2
5.6
5.9
6.3
6.4
8.1
7.8
7.9
8.7
9.3
9.8
10.5
11.7
12.7
14.2
15.6
16.4
16.6
18.5
22.4
23.2

Federal
•Reserve
System l

0.5
0.4
0.5
0.7
0.7
0.8
1.0
1.0
1.0
1.1
1.2

1.4

GNP
Other

4.7
4.8

5.1
5.3
5.6
5.6
7.1
6.8
6.9
7.6
8.0
8.4

1.7
2.0

8.8
9.7

2.4
2.9
3.5
3.7
3.7
3.8
NA
NA

10.3
11.3
12.2
12.6
12.9
14.7

NA
NA

N A = N o t available.
* Estimated.
Budget outlays for 1954-75 are given in the Budget, part 7. table 20.

1.43

V
%
.38
.44
.37
63
.54
46
.51
51
50
.45
57
54
58
64
67

.51
1 57
1 67
1,59

Budget
outlays 2

7.31
7.56
7.91
7.74
7.68
6.96
8.74
7.97
7.40
7.78
7.80
8.31
7.77
7.39
7.09
7.68
7.95
7.74
7.20
7.51
8.17
7.62

SPECIAL ANALYSES

Since the end of World War II the composition of the Federal debt
has changed, with an increasingly large proportion of Federal securities
having a relatively short maturity. One contributing factor was the
statutory ceiling of 4%% that has been maintained since 1918 on the
interest rate which could be paid on Treasury bonds.3 Because longterm market rates have been higher than 4%% in recent years, the
ceiling prevented the Treasury from selling long-term obligations after
1965. The ceiling thereby tended to increase the gross dollar volume of
debt refunded each year. Since 1965, the average maturity of Treasury
marketable debt has declined from about 5 years to about 3 years.
This restriction on Treasury borrowing was relaxed in March 1971 by
a law that allowed the Treasury to issue up to $10 billion of long-term
bonds at interest rates above 4%%. In July 1973 the restriction was
relaxed further by exempting from this limit those bonds held by
Government accounts and the Federal Reserve System. Since the
change of law in 1971, Treasury has sold $9.8 billion of bonds, including those bought by Government accounts and the Federal Reserve
System. The interest rates have ranged upwards from 6.1% with an
average of 6.7%.
BORROWING BY FEDERAL AGENCIES

A few Government agencies are authorized to sell their own debt
instruments to the public and to other Government agencies and
funds. This agency borrowing is part of the gross Federal debt. For
those agencies included in the budget, the authorization to borrow is
budget authority and the disbursement of such borrowed money is a
budget outlay.
Net changes in outstanding agency debt were shown in total in
table C-l and are shown by agency in table C-5. In 1973 the new
agency borrowing exceeded the repayment of agency debt by $0.2
billion. In 1974 and 1975, net agency borrowing is expected to be
$1.6 billion and $1.8 billion, respectively. The agency debt outstanding
on June 30, 1975, is estimated to be $14.5 billion, which is 3 % of
gross Federal debt.
By the end of 1975, $4.3 billion of the agency debt, or over a quarter
of the total, will consist of certificates of participation in pools of
loans issued in prior years by the Government National Mortgage
Association, as trustee on behalf of the Department of Agriculture,
the Department of Health, Education, and Welfare, the Department
of Housing and Urban Development, the Veterans Administration,
and the Small Business Administration. The issuance of certificates of
participation was discontinued after 1968.
Agency debt includes the borrowing of off-budget Federal agencies,
which are wholly Government-owned corporations whose transactions
are excluded from the budget totals. Those off-budget agencies that
will have borrowed by the end of 1975 are the Export-Import Bank,
* Until 1967, 5-year notes were the longest term security that could be issued without regard to
this limitation. In 1967 the maximum maturity of notes was raised to 7 years.

THE BUDGET FOR FISCAL YEAR 19 75
Table C-5. AGENCY BORROWING * (in millions of dollars)

Description

or decre
in debt
1973
actual

1974
estimate

1975
estimate

Debt
outstanding
end 1975
estimate

Borrowing from the public:

Agriculture: Farmers Home Administration2
Defense
Health, Education, and Welfare 2
Housing and Urban Development:
College housing loans 2
Public facility loans 2
Federal Housing Administration
Housing for the elderly 2
Government National Mortgage Association 2__
Veterans Administration 2
Export-Import Bank
_.
Postal Service
_
_
2
Small Business Administration
Tennessee Valley Authority
All other
Total borrowing from the public

Borrowing from other funds:

Agriculture: Farmers Home Administration 2
Defense
_
Health, Education, and Welfare 2
Housing and Urban Development:
College housing loans 2
Public facility loans 2
Federal Housing Administration
Housing for the elderly 2
Government National Mortgage Association 2_
Veterans Administration 2
Small Business Administration 2
Tennessee Valley Authority
Total borrowing from other funds _
Total agency borrowing *
*Less than $500 thousand.
Excludes agency borrowing from Treasury.
Certificates of participation in loans.

1
2

-25
-83
-2

-32
-3 .
-39
_*
-97
-246
402
-42 .
488
_*
319

-87

-95

_*
_

-1

-65
-45
919
475

-78
-32
1,063
500

304
94
352
64
696
677
4,203
1,225

471
7

480
7

3,155
22

1,675

1,844

12,631

-14

23
8

1
-21
*
1
*
-3
*
3
3 .
1
-88

37
1

1,110
130

15
7

-4

164
68
163
49
49
33
500
546
11
6

-51 .

-104

-69

216

1,606

-18

1,909

1,826 14,540

SPECIAL ANALYSES

excluded by statute from the budget totals as of August 17, 1971;
the Postal Service fund, excluded from the budget totals as of July 1,
1973, after the transition period provided in the Postal Reorganization
Act; and the Federal Financing Bank (FFB), created off-budget as of
December 29, 1973, for which borrowing estimates are not yet available.
The FFB was created under the Treasury Department to assist
agency borrowing and Government-guaranteed borrowing and to coordinate these borrowings with Treasury debt management. It was
given the authority to purchase agency debt and Governmentguaranteed loans and, in turn, can finance its purchases of these
obligations by selling its own debt instruments to the public. Since the
FFB should be able to borrow from the public at lower interest rates
than other agencies have to pay, this new procedure is expected to
reduce the cost of agency borrowing activities. To the extent that this
procedure is used, the FFB will serve as a conduit for agency borrowing, and FFB securities will replace the securities of other agencies in
the market.
The Treasury provides capital to business-type Government enterprises both in the form of capital stock and in the form of "debt."
This provision of "debt" is shown as "borrowing from Treasury" on
the statements of financial condition for enterprises in the Budget
Appendix. However, the equity and the "debt" instruments are the
same in substance; and it would be double counting to add together
the agency "borrowing" from the Treasury and the Treasury borrowing from the public that was necessary to provide the agencies with
this capital. Therefore, agency "borrowing" from Treasury is excluded
from figures on agency "borrowing" and "debt" in all other parts of
the budget documents.
AGENCY INVESTMENT IN FEDERAL SECURITIES

Trust funds and some public enterprise funds accumulate cash in
excess of current requirements in order to meet future claims and
demands. Such cash surpluses are mostly invested in Treasury debt,
or, to a very small extent, in agency debt. Purchases of these securities
are not counted as budget outlays, and redemptions are not counted
as budget receipts.
As shown in table C-6, net investment by trust funds and other
Federal agencies in Government securities was $11.8 billion in 1973.
About $4.5 billion was due to the p'rocedural change mentioned earlier
for the securities held by certain social insurance trust funds. Net
investment is estimated to be $14.4 billion in 1974 and $9.1 billion in
1975. The total agency holdings of Federal securities will reach an
estimated $148.9 billion by June 30, 1975. This will constitute 29% of
the gross Federal debt. Two major groups of trust funds—the social
security funds and the Civil Service Commission funds—will account
for 66% of total agency holdings, and all the trust funds together will
account for 92%. Ninety-nine percent of the holdings will be Treasury
debt, and the holdings of agency debt will decline by small amounts
each year.

THE BUDGET FOR FISCAL YEAR 1975
Table C-6. AGENCY INVESTMENT IN FEDERAL SECURITIES
(in millions of dollars)

Description

Increase or decrease ( —)
in holdings
1973
actual

Investment in public debt (issued by Treasury):
Health, Education, and Welfare:
Federal old-age and survivors ins. trust fund 1
Federal disability insurance trust fund l
Federal hospital insurance trust fund
Federal supplementary medical ins. trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Other..
Labor: Unemployment trust fund
Transportation: Highway trust fund
Treasury: Exchange stabilization fund
Veterans Administration:
National service life insurance fund
Other trust funds
Other
Civil Service Commission:
Civil Service retirement and disability fund l
Other trust funds
Federal Deposit Insurance Corp.: Trust fund
Federal Home Loan Bank Board: FSLIC
Postal Service
Railroad Retirement Board: Trust funds l
Other trust funds
All other
Total investment in public debt
Investment in agency debt:
Agriculture: CCC
Health, Education, and Welfare:
Federal old-age and survivors ins. trust fund
Federal hospital insurance trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Veterans Administration: National service life insurancefund
.
Civil Service Commission: Civil Service retirement
and disability fund.
Federal Home Loan Bank Board: FSLIC
Postal Service
Railroad Retirement Board: Trust funds
Total investment in agency debt
Total agency investment in Federal securities..

Holdings
ena i7/J
estimate

1974
estimate

1975
estimate

2,298

3,049

1,091

792

582

1,338

3,025

2,309

222

354

214

40
277
20

37
287
27

128
238
1

1,303
1,402

1,144
1,094

1,033
1,710

-410
1,420

11,579
8,680
2
2,934

272
-27
53

209
-37
67

214

6,850

-36

3,198
139

3,404

2,730

214
558

252
565
344

347

537
258
-181

24
14

334
-385
-62

-200

39,086
8,473
9,507
1,267

135

618
740
36,625
1,934
6,759
3,586

500

4,513

16
49

330

11,925

14,494

9,141

147,020

-6

198

555
50
—9
12

—4
—54

—4
—8

189
197
310

-2
-99

375
142
-5
50

-104

-69

-18

1,909

11,822

14,424

9,123

148,929

SPECIAL ANALYSES

LIMITATIONS ON FEDERAL DEBT

Statutory limitations have customarily been placed on Federal
debt. After enactment of the Second Liberty Bond Act in 1917, the
limitation on the amount of debt developed in several steps from being
an authorization of an amount for each specific issue to being an
overall ceiling on the total amount of most outstanding Federal debt.
The latter type of limitation has been in effect since 1941. The limit
currently applies to the total of:
• All public debt issued by the Treasury since September 1917,
whether held by the public or by the Government;
• Agency debt in the form of participation certificates issued
during 1968 under the Participation Sales Act of 1966; and
• Other debt issued by Federal agencies (and the District of Columbia Armory Board) which, according to explicit statute, is fully
guaranteed as to principal and interest by the United States.
The statutory limitation was $450 billion from March 15, 1972,
to October 31, 1972, and was increased to $465 billion for the period
beginning November 1, 1972, and ending November 30, 1973. This
limit consisted of a permanent limit of $400 billion and a temporary increase to that limit of $65 billion. On November 30, 1973, the
temporary increase of $65 billion expired, and the level of the statutory
limitation was reduced to the permanent limit of $400 billion. On that
date the outstanding debt subject to limit was $65.0 billion more than
the permanent limit. On December 3, 1973, a temporary increase of
$75.7 billion was enacted, which raised the statutory limitation to
$475.7 billoin. This temporary limitation expires on June 30, 1974,
after which the permanent limit of $400 billion is scheduled to come
into effect again.
The outstanding debt subject to limitation is shown in table C-7
and compared with the gross Federal debt and the Federal debt held
by the public. The debt subject to limitation was $459.1 billion at the
end of 1973 and is expected to be $475.4 billion and $495.2 billion at the
ends of 1974 and 1975, respectively. These amounts are substantially
more than the permanent debt limit of $400 billion. The debt subject
to limitation equals about 98% of the gross Federal debt. Like the
gross Federal debt, it was increased by about $4.5 billion at the end
of 1973 and each subsequent year due to the procedural change in the
recording of trust fund holdings of public debt at the end of the month.

THE BUDGET FOR FISCAL YEAR 1975
Table C-7. DEBT SUBJECT TO STATUTORY LIMITATION
(in millions of dollars)
End of year

Description
1973
actual

1974
estimate

1975
estimate

Federal debt held by the public

343,045

346,545

359,045

Add: Federal debt held by Government agencies

125,381

139,806

148,929

468,426

486,350

507,973

620

618

1,484
2,221
250
2,255
3,345
8
10,182

1,382
3,141
725
2,675
3,235
15
11,790

1,274
4,203
1,225
3,155
3,125
22
13,622

Federal debt subject to statutory limitation
Add:
District of Columbia Stadium bonds
Special notes held by International Monetary Fund

458,244

474,560

494,351

20
825

Total debt subject to statutory limitation

459,089

475,405

495,196

Gross Federal debt
Deduct:
Public debt not subject to limitation
Agency debt not subject to general limitation:
Department of Defense
Export-Import Bank
Postal Service...
Tennessee Valley Authority
Participation certificates1
Other
Total Federal debt not subject to limitation

1
Certificates of participation issued by the Government National Mortgage Association as trustee
for 5 departments and agencies (excluding certificates issued during 1968).

The Federal debt held by the public is projected to increase by $3.5
billion in 1974 and by $12.5 billion in 1975. The debt subject to statutory limitation is expected to rise by more: $16.3 billion and $19.8
billion in these 2 years, respectively. The greater growth in the debt
subject to limitation is due primarily to the Government trust funds
and other agencies investing in Federal debt. Their holdings are almost all subject to the statutory limitation, but they are not part of
the debt held by the public.
Almost the only agency debt subject to the general statutory limitation is the participation certificates sold in 1968 and the debentures
issued by the Federal Housing Administration. These two types of debt
together make up only about one-eighth of total agency debt. However
the other agency debt in most cases requires explicit statutory authorization. For example, the Postal Service is limited to $2 billion of
annual borrowing and $10 billion of outstanding bonds.

SPECIAL ANALYSES

FEDERALLY ASSISTED BORROWING

The impact of the Government on borrowing includes not only its
own borrowing to finance Federal operations but also its assistance to
certain borrowing by the public. Federally assisted borrowing4 is of
two types: Borrowing by Government-sponsored enterprises, and
Government-guaranteed borrowing by non-Federal borrowers.
Seven Government-sponsored enterprises, which are federally
chartered but privately owned in full, borrow under Government
auspices. The transactions of these enterprises are not included within
the Federal budget, and their debt is not part of the gross Federal
debt. These enterprises are essentially financial intermediaries, borrowing in the securities market and lending their borrowed funds for
specifically authorized purposes either directly or by purchasing loans
originated by the private group that they were established to assist.
The borrowing programs of all seven enterprises are subject to
Federal supervision. In addition, they all consult the Treasury
Department, either by law or by custom, in planning their marketofferings. The Federal National Mortgage Association and the Federal
home loan banks are required to obtain Treasury approval of the
terms and timing of specific offerings. Four of the enterprises are
systems of regional lending institutions that pool their borrowings. In
addition to their Federal sponsorship, all of the established enterprises have a history of successful financial performance. Hence, despite the absence of Federal guarantees (except for the Student Loan
Marketing Association), the obligations of these enterprises are sold
at interest rates only slightly higher than the rates on Treasury issues.
As shown in table C-8, the net borrowing by these seven Government-sponsored enterprises totaled $8.8 billion in 1973 and is expected
to be $13.6 billion in 1974 and $1.3 billion in 1975. The large borrowing in 1973 and 1974 primarily reflects strong support for the housing
market provided by the Federal home loan banks, the Federal National Mortgage Association, and the Federal Home Loan Mortgage
Corporation. The small net borrowing estimated for 1975 is mostly
due to the activity of the Federal home loan banks. They are expected
to advance substantially less new credit than previously to their
member savings institutions, and to have a substantial rise in the
repayment of advances that they made in previous years. Special
Analysis E discusses the lending by the Government-sponsored enterprises.
4
The off-budget Federal agencies are classified outside the budget totals but remain Government-owned and therefore are not classified as Government-sponsored. Their debt is included in
gross Federal debt.

THE

BUDGET FOR FISCAL YEAR

1975

Table C-8. NET CHANGES IN DEBT OF GOVERNMENT-SPONSORED
ENTERPRISES (in millions of dollars)
Increase or decrease ( —)
Description

Health, Education, and Welfare: Student Loan
Marketing Association
Housing and Urban Development: Federal National
Mortgage Association
Farm Credit Administration:
Banks for cooperatives
_.
Federal intermediate credit banks
_
Federal land banks
Federal Home Loan Bank Board:
Federal home loan banks
Federal Home Loan Mortgage Corporation2 _
Total

1973
actual

1974
estimate

1975
estimate

Debt
outstanding
end 1975
estimate

1,834

480
4,726

970
2,035

1,450
27,127

569
555
1,518

249
766
1,423

178
969
1,497

2,844
8,471
12,042

3,706
618

5,479
486

-5,182
800

* 10,212
3,519

8,801

13,609

1,267

65,665

1
Excludes $300 million of loans to the Federal Home Loan Mortgage Corporation in order to
prevent double-counting for the Government-sponsored enterprises as a whole.
2
Figures exclude the sale of participation certificates (pass-through type) that offset the purchase
of mortgage loans. These sales are treated by FHLMC as a sale of loan assets rather than as borrowing and therefore are not reflected as debt on its balance sheet. Net increases in outstanding participation certificates were $267 and $433 million in 1972 and 1973 and are estimated at $920 and
$1,495 million in 1974 and 1975, with 1975 yearend outstandings of $3,115 million.

The other type of federally assisted borrowing, Governmentguaranteed borrowing, is supported by the programs of several Government agencies. The major part of Government-guaranteed debt
consists of mortgages on residential property. As shown in table C-9,
Government-guaranteed borrowing was $15.2 billion in 1973 and is
expected to be $15.4 billion in 1974 and $13.3 billion in 1975. Special
Analysis E analyzes the guarantee programs in detail.
TOTAL FEDERAL AND FEDERALLY ASSISTED BORROWING

Table C-9 summarizes Federal and federally assisted borrowing
from the public. Federal borrowing from the public is presented in
total. Borrowing by Government-sponsored enterprises and Government-guaranteed borrowing are presented both in total and as net
amounts, the latter having been adjusted in order to remove double
counting in the derivation of total Federal and federally assisted
borrowing from the public. By the end of 1975, the Federal debt
held by the public is expected to be $359.0 billion, and the total Federal and federally assisted debt held by the public is expected to be
$590.9 billion.

SPECIAL ANALYSES

Table C-9. NET BORROWING FROM THE PUBLIC BY GOVERNMENT,
GOVERNMENT-SPONSORED ENTERPRISES, AND GOVERNMENTGUARANTEED BORROWERS (in billions of dollars)
Borrowing or
repayment ( —)

Description

1973
actual

Federal borrowing from the public 1

1974
1975
estimate estimate

Debt
outstanding
end 1975
estimate

19.3

3.5

12.5

359.0

8.8
—1.9

13.6
1.1

1.3
.6

65. 7
4.5

Net Government-sponsored borrowing from public.

10.7

12.5

61.1

Government-guaranteed borrowing 3__
Less: Change in Government-guaranteed loans held by
Federal agencies or Government-sponsored enterprises:
Federal National Mortage Association
Government National Mortgage Association
Environmental Financing Authority
Export-Import Bank
Student Loan Marketing Association
Federal Home Loan Mortgage Corporation

15.2

15.4

13.3

202.8

2.2
—1.2

3.0
—.5
.1

25.2
2.9
.3

Borrowing by Government-sponsored enterprises
Less increase in holding of Federal debt

.5
.3

1.4
—.6
.2
_
1.0
.3

Net Government-guaranteed borrowing from
public
._

14.0

12.0

11.0

170.7

Total, Federal and federally assisted borrowing from the public
-_._

44.0

28.1

24.2

590.9

—.2

1.4
2.2

1 See table C-1.
See table C 8 for details and explanations.
—
The same as Government-guaranteed loans. See tables E-5 and £ - 8 .

2
3

The following chart depicts the trends in Federal and federally
assisted borrowing from the public between 1964 and 1975. The total
Federal and federally assisted borrowing reached a peak at $44.0 billion
in 1973 and is expected to decline thereafter to $28.1 billion in 1974
and $24.2 billion in 1975. In 1974 the decline is due to a substantial
decrease in Federal borrowing, while in 1975 the decline is dominated
by a large drop in net Government-sponsored borrowing that exceeds
the rise in Federal borrowing.

THE BUDGET FOR FISCAL YEAR 1975

Federal andFe derally Assisted Borrowing
CR;ii;-_,
*uitiions

$ Billions
— 50

40-

-40

A
/\

30-

Federal

/•••

Borrowing

Ft
R poyments /
e
i at 1 0 Billion /

-30

•I
mm*

..-. > ^ ^ ^ M

20-

-20

/ • . • . • . • . • . • . . • . . • . • . • . • . • . • . • . • .

^OOO<XXXXXSOOOOOOOOO< )O000OOO\xxSooooooL
• •••: JQ<5<xVVVxxxSoO<XXVxVXX
xWvVVVVV
\
88888o883
VVVVVVVvvvvvVSA,
"!xXxS<XXXX>OOOOOOvOv - 1 0
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* J&

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iiSii

. - , • - •

; • • , • •

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VWSoo.V W W N
1964

'65

Fiscal Ye

« Federally Assisted Borrowing ^ ^ ^
sXxXXxxxxxXxXxXxxxxxxxxxxx5oooOsXx Svvvvyvvv
^^^^^^^^>:
>«^^^K
XXQOQTVXXV"

'66

"67

'68

'69

'70

•'"•SCXXXXXXX

'71

'72

'73

'74

'75

Estimate

As the chart shows, Federal and federally assisted borrowing is
now substantially higher than in earlier years. Much of the increase
parallels the growth in the economy and in the total funds raised by
the nonfinancial sector through the sale of debt securities and other
forms of borrowing and through the sale of corporate equities. However, to some extent the total Federal and federally assisted borrowing
has increased as a proportion of the total funds raised. From 1960-67
to 1968-73, this proportion increased from 15% to 23%. Thus,
despite the decreasing relative importance of Federal debt in total
debt, Government programs since 1968 have influenced the allocation
of funds raised in financial markets more than they did previously.
Since 1968, however, this tendency has not increased.

SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS

This analysis divides outlays between those that are of an investment or "capital" nature and those directed to operating or "current"
purposes.
To facilitate the analysis, the outlays presented in the budget are
classified into three categories. Each of the major classifications is
then subdivided so that civil and national defense outlays can be
separately analyzed. The national defense grouping in this analysis is
the same as the national defense function in the budget; the civil
grouping includes all other functions. The three major categories are:
Investment-type outlays.—These outlays yield benefits over several
years and consist of Federal outlays that lead to investments in:
Federal assets of both a physical and a financial nature; State, local,
and private physical assets; developmental expenditures which add to
the Nation's capacity for better education, technical innovation,
and health services.
Current outlays.—These outlays provide benefits only in the year
that they are made. Included are aid and special services to agriculture, business, labor, homeowners, tenants, and veterans; aid for
international commitments; and Federal welfare obligations. Also
included are: Payments from retirement and social insurance trust
funds established to provide an assured income to contributors or
their families in the event of unemployment, retirement, disability,
or death; and, other services and current operating expenses. Finally,
this category includes transactions such as: Operation and administration of Federal departments and agencies; repair, maintenance, and
operation of physical assets; regulatory and control activities; and
interest.
Unclassified outlays.—These outlays cannot be precisely classified in
either of the above two categories and are placed in this residual classification. Included are: Allowance for contingencies; and certain financial adjustments that cannot conveniently or precisely be distributed,
such as proprietary receipts and the employer share of employee
retirement.
These three categories of outlays are summarized in Table D-l for
fiscal years 1973-1975.
• Current putlays are expected to be $244 billion in 1975, 10%
higher than the $221 billion in 1974.
• The fastest growth by far in these ojtitjays is in retirement and
social insurance benefits, which will increase by about $13.7
billion between 1974 and 1975.
• Investment-type outlays are expected to amount to $76 billion
in 1975, about 9% above a year earlier. As a percent of the budget
total, civil investment-type outlays have remained nearly constant
over the past 5 years.
• Additions to State, local, and private assets will increase by 20%
from 1974 to 1975.

540-700
O - 74 - 4

T H E BUDGET FOR FISCAL YEAR

19 7 5

Table D - 1 . SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in billions of dollars)
Outlays
1973
actual
INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Civil:
Loans and other financial investments
Physical assets:
Public works..__._
Major commodity inventories
Major equipment and other physical assets
National defense
Additions to State, local, and private assets:
Civil
National defense
Developmental outlays:
Civil.
National Defense

1974
estimate

1975
estimate

0.7

2.0

2.5

3.3
—.6
1.0
18.1

3.6
—.4
1.2
17.8

3.9
.2
1.0
19.6

8.3
*

9.7
*

11.7
*

22.7
9.9

25.5
10.2

26.0
10.9

Subtotal, investment type outlays:
Civil
National defense

35.5
28.0

41.6
28.0

45.2
30.5

Total

63.5

69.6

75.8

44.6
2.0
67. 8

47.9
3.1
79.1

48.4
3.8
92. 8

17.4
15.2
48.4

21.3
15.9
53.5
-1

22.0
18.7
55.8
2.2
-6

Subtotal, current outlays:
Civil
National" defense

144.9
50.3

164.3
56.7

182.4
61.8

Total

195.3

220.9

244.2

*
—2.9

*
-3
—3.5

•->
—3.6

-7.1
-2.3

-8.5
-4.1

-10.1
-2.3

-11.8
-4.1

-7.8
-4.7
,. _
-10.9
-4.7

-12.4

-16.0

-15.6

170.5

194.1

216.7

76.0

80.6

87-_7

246^5

274.7

304.4

CURRENT OUTLAYS
Current expenses for aids and special services:
Civil...
___
. _.
_
National defense
Retirement and social insurance benefits—civil
Other services and current operating expenses:
Civil:
Net interest
Other
National defense
Allowances, Department of Defense
Allowance for civilian agency pay raises

UNCLASSIFIED
Intragovernmental transactions (—)
Allowance for contingencies
Employer share, employee retirement (—)
Proprietary receipts from the public (—):
Civil_____ . _
National defense
Subtotal unclassified outlays:
Civil
National defense
Total
Total budget, outlays:
Civil
National defense
Total
"Less than $50 million.

=
.

SPECIAL ANALYSES

Table D-2 shows civil investments and current operating outlays
as a percentage of total budget outlays. The decline in this percentage
from 1974 to 1975 is attributable largely to the sharp drop in farm price
support payments, an expected decrease in the subsidy payment to
the Postal Service, and a reduction in the number of veterans in training under the current GI bill.
Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS
(Percent of total budget outlays)
1971
actual

1972
actual

1973
actual

1974
estimate

1975
estimate

INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Loans
Other financial investments
Public works—sites and direct construction
Major commodity inventories
Major equipment
Other physical assets—acquisition and improvement

0.7
.1
1.2
—. 3
.1

1.3
.1
1.4
.1

0.2
.1
1.3
-.2
.1

0.5
.2
1.3
-.2
.1

0. 6
2
i! 3
1
*

Subtotal, additions to Federal assets

2.0

3.2

1.8

2.3

2.5

Additions to State, local, and private assets:
State and local assets
Private assets

3.1
.4

2.9
.4

3.0
.4

3.2
.3

3.5
.3

Subtotal, additions to State, local, and
private assets

3.5

3.3

3.4

3.5

3.9

Other development outlays:
Education, training and health
Research and development
Engineering and natural resources surveys. __

5.8
3.1
.1

6.5
2.9
.1

6.3
2.9
.1

6.5
2.7
.1

5.7
2.8
.1

8.9

9.5

9.2

9.3

8.6

14.5

15.9

14.4

15.1

14.8

Subtotal, other development outlays
Total, investment-type outlays

THE BUDGET FOR FISCAL YEAR

1975

Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING
OUTLAYS—Continued
(Percent of total budget outlays)
1971
actual

1972
actual

1973
actual

1974
estimate

1975
estimate

CURRENT OUTLAYS
Current expenses for aids and special services:
Agriculture
Business
Labor
Homeowners and tenants
Veterans
.
International aids
Welfareaids
Other aids and special services

2.3
1.0
.5
.1
4.7
.6
4.5
2.5

1.8
1.1
.5
.3
4.8
.8
5.4
2.3

2.2
1.3
.6
.6
5.1
.6
5.3
2.4

1.0
1.2
.6
.6
5.0
.5
5.7
2.9

.4
1.0
.5
.7
4.5
.4
6.0
2.3

Subtotal, current expenses for aids and
special services

16.2

17.1

18.1

17.5

15.9

Retirement and social insurance benefits:
Insurance benefits
Unemployment benefits
Other retirement and social insurance benefits. _

20.8
2.5
1.2

21.2
2.6
1.6

23.9
1.8
1.8

24.9
1.7
2.2

26.1
2.0
2.4

Subtotal, retirement and social insurance
benefits

24.4

25.4

27.5

28.8

30.5

Other services and current operating expenses:
Repair, maintenance and operation of physical
assets (excluding special services)
Regulation and control
Other operation and administration
Netinterest
Allowance for civilian agency pay raises

.5
.8
2.2
7.2

.5
1.0
1.9
6.9

.6
.9
4.6
7.1

.5
1.0
4.2
7.8

.6
1.1
4.5
7.2
.2

Subtotal, other services and current operating expenses

10.6

10.3

13.2

13.5

13.6

Total, current outlays

51.3

52.8

58.8

59.8

59.9

65.8
-2.5

68.8
-2.6

73.3
-4.1

75.0
-4.3

74.6
-3.4

63.3

66.2

69.2

70.7

71.2

Total, civil investments and current operating outlays
Unclassified civil offsets
Net civil outlays

OUTLAYS OF AN INVESTMENT NATURE

Outlays of an investment nature are divided into three categories:
(1) Additions to Federal assets; (2) additions to State, local, and
private assets; and (3) developmental outlays. The investment portion
of civil outlays is $45.2 billion, approximately 15% of the budget.
Defense investments are $30.5 billion, 10% of the 1975 budget.
Additions to Federal assets.—This category comprises additions
to both financial and physical assets of the Federal Government.
Civil Federal assets in 1975 increased by $7.6 billion, increasing by $1.2
billion, or 19% over the 1974 increase. Investment in defense assets in
1975 is planned to be $19.6 billion, an increase of $1.8 billion and
an increase of 10% over the 1974 investment.

SPECIAL ANALYSES

The financial assets are primarily direct loans—for example, loans
to finance private housing construction and encourage homeownership,
to help small businesses, to finance rural electric and telephone
systems, and to promote economic development abroad. Federal
financial assets include both loans and other financial investments.
Other financial investments include the capital provided for certain
international organizations such as the World Bank.
Civil loans and financial assets are estimated to increase $2.5 billion
and represent 0.8% of the 1975 budget. Loans are expected to increase
by $0.4 billion. Special Analysis E discusses financial investments in
greater detail. Additions to physical assets include outlays for public
works, such as dam construction, flood control projects, Federal
power systems, changes in major commodity inventories, and outlays
for major equipment (including military equipment) and for the
acquisition and improvements of real property and other physical
assets.
Additions to civil physical assets are $5.1 billion in 1975, an increase
of $0.7 billion over 1974. The major change is in outlays for major
commodity inventories which are expected to increase $0.6 billion
(from —$0.4 billion in 1974 to $0.2 billion in 1975).
Additions to State, local, and private assets.—Federal outlays
in this category add to State, local, and private assets. Grants that
add to the physical assets of State and local governments are primarily for the construction of highways (mainly through the highway
trust fund), hospitals, airports, waste-treatment plants, watershed
protection projects, schools in federally affected areas, and public
facilities under economic development programs for depressed regions.
Outlays that increase the value of privately owned assets are
largely for the conservation and improvement of private farmland
and water resources, for grants for construction of private nonprofit
hospitals and other health facilities, and for construction subsidies
to the merchant fleet.
Civil additions to State, local, and private assets in 1975 will be
$11.7 billion, an increase of $2.0 billion, primarily in Federal environmental construction grants. The rate of increase from 1974 to 1975
is about 21%.
Developmental outlays.—Federal outlays of this type are principally for research and development, education and health, and other
programs that improve the Nation's knowledge, technical skills, and
physical vigor. The Federal outlays shown in this category do not
fully reflect the Government's contribution to the productivity of the
economy. Certain other programs that further this end are classified
in accordance with their principal purpose; thus, veterans educational
benefits are listed as current expenses for veterans aid rather than as
developmental outlays. Similarly, the training of military personnel
and other Government employees is treated as an operating expense
and not as part of the Government's education and training programs.
Civil developmental outlays are $26.0 billion, an increase of $0.5
billion from 1974. This includes the $0.5 billion contingency for
accelerated energy research and development.

THE BUDGET FOR FISCAL YEfAR 19 75

Civil outlays for education, training, and health are $17.3 billion
in 1975. This amount is 6% of 1975 outlays.
Current civil outlays for research and development are $8.4 billion
in 1975 and reflect an increase of $0.9 billion from the 1974 level.
An allowance for accelerated energy research and development
accounts for nearly $0.5 billion of the increase in 1975. The rate of
increase in 1975 is 12% over 1974 most of which is the allowance for
accelerated energy research and development.
OUTLAYS OF A CURRENT NATURE

Outlays of a current nature are divided into the following categories :
(1) Current expenses for aids and special services; (2) retirement and
social insurance benefits; and (3) other services and current operating
expenses.
Current outlays for civil functions are $182.4 billion, an increase
of $18.1 billion from 1974. The rate of increase will drop from 13%
in 1974 to 11% in 1975. Current outlays for military functions are
$61.8 billion, an increase of $5.2 billion from 1974. The rate of increase
will decline from 13% in 1974 to 9% in 1975.
Current expenses for aids and special services.—Outlays classified under this heading provide aids or special services to certain
groups, mainly in the year in which the outlays are made. In addition
to such items as outlays for the farm programs of the Commodity
Credit Corporation, maritime operating subsidies, veterans pensions,
and grants to foreign nations for economic and military assistance,
this category includes: (1) Administrative and other operating expense attributable to investment-type programs that benefit specific
groups; and (2) the costs of maintaining the physical assets related
to those programs.
Only part of the Federal Government's aid to special groups is
reflected in this classification, which is limited by definition to current
expenses. For example, subsidies for the construction of private merchant ships are classified as additions to private assets. Similarly,
outlays for which the Federal Government increases its holdings of
assets or collateral (as the acquisition of farm commodities by the
Commodity Credit Corporation) are treated as additions to Federal
assets. Many indirect Government aids are excluded from this classification because they either are not reflected in outlays or cannot be
readily measured. Examples of such indirect benefits are preferential
tax treatments.
Although outlays in this category essentially provide a direct aid
or special service yielding immediate benefits, some of the items included contribute indirectly to the Nation's future development.
Among these are grants for several community development purposes.
Aids to Agriculture are expected to continue to decline reaching
$1.1 billion in 1975, a decrease of $1.7 billion from 1974. This decline
is largely due to decreases in price support and related programs.
The increase in welfare is expected to slow from an annual rate of
22% and an increase of $2.8 billion in 1974, to a rate of 15% and
an increase of only $2.4 billion in 1975.

SPECIAL ANALYSES

Retirement and social insurance benefits.—This category applies
only to trust funds. It covers benefit programs that are financed from
special taxes or contributions and provide insurance against the loss of
income due to unemployment, retirement, disability, or death. It does
not include outlays for Government employees7 health and life
insurance programs, which are in the form of premium payments to
approved companies and are included with "other services and current
operating outlays.'7
A large part of the growth in retirement and social insurance benefits
is the result of a growing number of recipients as well as recently
legislated increases. Outlays for these benefits are expected to increase
17% in 1975, to $92.8 billion. These benefits will be 30% of the budget
in 1975.
Other services and current operating outlays.—The outlays
reported under this heading support a wide range of activities. They
consist mainly of: Pay and subsistence of military personnel; repair,
maintenance, and operation of physical assets of the national military
establishment and general purpose public buildings; conduct of
foreign affairs; tax collection; interest on the public debt; and operation and administration of other direct Federal programs not elsewhere classified.
These outlays are expected to increase by $5.8 billion and will
reach $96.5 billion in 1975. Revenue sharing accounts for the large
1972 increase in this category. Shared revenues and grants-in-aid
increase by nearly $2.6 billion in 1975.
UNCLASSIFIED

Certain transactions cannot be properly classified into any of the
categories described above. A major example of such transactions is the
special allowance for unforeseeable contingencies.
Intragovernmental receipts arise as a result of transactions between
Government agencies or funds. These transactions occur entirely
within Government accounts and are deducted from outlays to avoid
double counting. In order to provide a measure of outlays by character,
most intragovernmental receipts are allocated to a particular category
whenever possible. For example, interest received by the social security
and other trust funds is deducted from the Interest category in order
to derive a measure of interest paid to the public. In addition, Government agency contributions for employee retirement, which help to
finance retirement benefits, are deducted as a lump-sum unclassified
amount.
Proprietary receipts from the public, arising from market-oriented
or business-type activities of the Government, are unclassified and
are offset against total outlays to highlight the net impact of the
budget.
RELATIONSHIP TO CAPITAL BUDGET

The U.S. Government does not produce a capital budget in the
sense of a long-range program for the acquisition of assets, with
separate financing of capital outlays. Some foreign governments and

THE BUDGET FOR FISCAL YEAR 19 75

some State and local governments fund a portion of their capital
expenditures by separate borrowing. They exclude most or all such
expenditures from their computation of budget totals, except for
annual charges to amortize these capital outlays over a number of
years.
While this analysis does not provide a precise measure of the
difference between capital and current items, it does indicate useful
general magnitudes. However, it does not make any allowance for
depreciation and obsolescence on existing physical assets, anticipated
losses on loan programs, or profit or loss on sales of assets at figures
different from their book value. Agencies record such allowances for
transactions only where the data will serve program and management
needs, as in the case of the public enterprise funds. As a result, this
analysis does not estimate the net addition to the value of federally
owned assets.
Recoverability of outlays.—In general, Government outlays for
assets are not expected to be recovered by specific revenues. However,
most loans, investment in commodity inventories, the construction of
powerplants, and outlays for range and forest improvements on public
domain and national forest lands are offset in whole or in part by receipts to the Treasury through repayments and sales, specific charge's,
or recoveries. Where activities are carried on through revolving funds,
such as in the case of most loan programs, receipts are credited directly
against disbursements and only the difference is included in the total
of outlays in the budget and in this analysis. All other receipts from
the public arising from market-oriented or business-type activities of
the Government are offset against total outlays.
Whether recovered by specific receipts or not, investment and developmental outlays for both physical and human capital add to the
wealth and income of the Nation, and by helping to expand the tax
base, augment the Government's potential future receipts. However,
this analysis does not attempt to measure the degree of recoverability
of developmental outlays, the potential gain in public receipts that
will be forthcoming, or the duration of future benefits and their dis counted present value.
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)
Description

1973
actual

1974
estimate

1975
estimate

-813

196

Investment-type outlays
ADDITIONS TO FEDERAL ASSETS
Loans:
Civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation: Price support and related programs
Rural Electrification Administration

-348
519

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Investment-type outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued

Civil—Continued
To domestic and private borrowers—Continued
Department of Agriculture—Continued
Farmers Home Administration:
Rural housing insurance
Agricultural credit insurance
Rural development insurance
Other 1
Soil Conservation Service
Department of Commerce: Economic Development Administration and other
Department of Health, Education, and Welfare:
Health Resources Administration
Office of Education:
Higher education
Other
Social and Rehabilitation Service
Department of Housing and Urban Development:
Housing Production and Mortgage Credit: Federal Housing Administration and Government Mortgage Association:
Federal Housing Administration fund
Special assistance functions
Management and liquidating functions and other
Community planning and development and other
Veterans Administration:
Loan guaranty revolving fund
Direct loans
Other 1
Small Business Administration
Business loans and investment
Disaster loans
Other agencies
Total to domestic and private borrowers

-228
-198
-229

-369
-121

64
3
5
48
-7
*
3
1

20
3
4
1
3

20
5
7
9
2

232
10
1
2

347
462
81
3
28

-376

44
1
-92

488
-388
-219
-2

15
8
236
2
1

-143
-103
2
1

46
644
1
2

11
0
202
45

-51
*

-48
-6

1
7

-101

-83
2
1
17
4
19
4
1
4

—791

—124

—29

—22

—49

6
3
16
7
3
3

50
270
43

46
253
6

22
4

342

256

52
1
41
5
-3

579
61
4
-3

880
630
3

Total to foreign borrowers

90
6

1,217

1,506

Total loans, civil

41
1

1,435

1,856

To State and local governments:
Department of Housing and Urban Development: Community planning and development and other
Department of Transportation: Right-of-way trust revolving
fund and other
District of Columbia
Other agencies
Total to State and local governments
To foreign borrowers:
Funds appropriated to the President: International development assistance
Department of Agriculture: Public Law 480 credit sales
Other agencies

See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 1975

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

—4

—1

350

197

201

123
-6

682
1

Total, to foreign borrowers

468

880

666
-4
864

Total loans, national defense

464

878

863

Total, loans

875

2,313

2,719

324

533

609

96
74
5

89
109
5

77
88
7

942
76
7

913
100
1
6

935
119
23

3
1
27
25

65
58
39

7
1
72
44

232
79
29
14
82
80
1
9

198
102
76
5
1
90
112
3
1

247
85
82
43
99
16
3
24

315
59

253
62

303
76

Investment-type outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
National defense: To domestic and private borrowers: Other
agencies
To foreign borrowers:
Funds appropriated to the President: International security
assistance:
Foreign military credit sales (and liquidation of the fund) _
Military credit sales to Israel and emergency security
assistance for Israel
Atomic Energy Commission

Other financial investments—civil:
Investments in quasi-public institutions, trust funds, and international institutions: Funds appropriated to the President:
International financial institutions
Public works—sites and direct construction:
Civil:
Department of Agriculture:
Forest Service:
Forest roads and trails
Other 1
Other
Department of Defense—Civil:
Corps of Engineers:
Construction, general
Flood control, and other 1
Other 1
Department of Health, Education, and Welfare:
Indian health and other health services
National Institutes of Health
Other 1
Department of the Interior:
Bureau of Reclamation:
Construction and rehabilitation
Colorado River Basin project and other 1
National Park Service: Construction and other l
Office of Coal Research l
Bonneville Power Administration: Construction
Bureau of Indian Affairs: Construction of schools and roads_
Other
----Department of Justice: Federal Prison buildings and facilities
and other
.
Department of Transportation:
Federal Aviation Administration: Airway system investment
and development (Airport and airway trust fund)
Other
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973

1974

1975

Investment-type outlays —Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction—Continued
Civil—Continued
General Services Administration: Public buildings
National Aeronautics and Space Administration: Construction of facilities
Veterans Administration: Hospitals and other
Postal Service
Tennessee Valley Authority
Other agencies

249

256

240

45
96
230
461
39

75
122

102
182

571
135

690
145

3,325

3,582

3,908

1,019
2
262

1,187
1
436

1,416
*
491

Total, public works, national defense

1,283

1,624

1,908

Total public works—sites and direct construction

4,608

5,206

5,816

—611
12

—449
8

157
3

—599

—441

160

National defense:
Funds appropriated to the President: Expansion of Defense
Production
Other agencies
Intragovernmental transactions (—)

71
17

-134
39

-49
3

Total major commodity inventories, national defense

-95

-46

-512

-536

14
1

68
93
32

103

100

14
9

11
4

18
4

15,654
163

15,144
170

16,359
194

Total major equipment, national defense

15,818

15,314

16,552

Total major equipment

16,012

15,455

16,700

Total public works, civil
National defense:
Department of Defense—Military:
Military construction
Other
Atomic Energy Commission

Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation:
Agricultural commodities
Other agencies
Total major commodity inventories, civil

Total major commodity inventories
Major equipment:
Civil:
Department of Transportation: Coast Guard and other *
Postal Service
Other agencies l
Total major equipment, civil
National defense:
Department of Defense—Military: Procurement
Atomic Energy Commission

See footnotes at end of table.

THE BUDGET FOR FISCAL YEiAR 1975

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Investment-type outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Other physical assets—acquisition and improvement:
Civil:
Department of Agriculture: Reforestation and range improvements and other x
Department of Housing and Urban Development: Housing
production and mortgage credit
Department of the Interior:
Land and water conservation
Other
Other agencies
Total other physical assets, civil
National defense: Atomic Energy Commission
Total other physical assets—acquisition and improvement..
Total additions to Federal assets

9
1

621

852

618

93
24
4

110
29
-4

89
33
-4

808

1 070
,

827

393

367

1.201

1 138
,

1 194
,

22,507

24, 108

5
27, 1 1

215
*

229
1

253

53
79

70
120

55
101

192

13
9

226

191
120
30

261
69
27

330
46
32

157
61
27
*

160
69
35
2

160
70
35
4

107
72
56

160
78
98

160
77
102

232

234

290

4,589
52
287
3
684

4,382
51
403
1
2,000

4,554
54
586

ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS
State and local assets:
Civil:
Funds appropriated to the President:
Appalachian regional development programs
Other
Department of Agriculture:
Rural water and waste disposal grants and other
Watershed and flood prevention operations
Department of Commerce: Economic development facilities
and other
Department of Health, Education, and Welfare:
Health resources
Higher education and other education
Other
Department of Housing and Urban Development:
Grants for basic water and sewer facilities
Open space land programs
Grants for neighborhood facilities
New community assistance
Department of the Interior:
Land and water conservation
Sport fisheries and wildlife and other
Department of Justice: Law enforcement assistance
Department of Transportation:
Grants-in-aid for airports (Airport and airway trust fund) _
Federal Highway Administration:
Federal-aid highways (trust fund)
Other 1
Urban Mass Transportation
National Highway Traffic Safety
Environmental Protection Agency: Construction grants
See footnotes at end of table.

3,350

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Investment-type outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
State and local assets—Continued
Civil—Continued
Washington Metropolitan Area Transit Authority
Other agencies 1
Intragovernmental transactions (—)
Total State and local assets, civil
National defense: Department of Defense—Military
Total State and local assets
Private assets:
Civil:
Department of Agriculture:
Rural environmental assistance
Cropland adjustment program
Conservation operations
Other
Department of Commerce: Ship construction
Department of Health, Education, and Welfare:
Health resources
Office of Education
Other
Other agencies
Total private assets, civil
National defense: Atomic Energy Commission
Total private assets
Total additions to State, local and private assets

76
4

183
8
—2

184
8

7,288

8,833

10,676

7,319

8,852

10,694

163
51
150
61
186

23
50
172
118
200

139
49
192
27
283

190
68
39
48

220
40
34
56

225
27
19
60

955

913

1,020

956

913

1,020

8,275

9,765

11,714

39
157
189

44
52
215

53
217

569
54
101
171
313
468
1,820
561
41
93

724
63
130
186
437
536
2,062
519
193
88

778
73
101
193
593
398
684
458
233
107

OTHER DEVELOPMENTAL EXPENDITURES
Education, training, and health:
Civil:
Funds appropriated to the President:
Appalachian regional development programs
Economic opportunity program
Department of Agriculture: Extension Service and othjer
Department of Health, Education, and Welfare:
Health services
Indian health
Preventive health services
National Institutes of Health
Alcohol, drug abuse, and mental health
Health resources
.
Elementary and secondary education
School assistance in federally affected areas
Emergency school assistance
Education for the handicapped
See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 19 75

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Con.
Education, training, and health—Continued
Civil—Continued
Department of Health, Education, and Welfare—Continued
Occupational, vocational, and adult education
Higher education
Library resources
Educational development
Other education
Public assistance
Rehabilitation services
Federal disability insurance and old-age and survivors insurance trust funds
Supplemental security income program
Howard University and other special institutions
Human development
Other
.
Department of the Interior: Operation of Indian programs and
other
,
Department of Justice: Law Enforcement Assistance and
other
Department of Labor:
Comprehensive manpower assistance
Emergency employment assistance
Program administration
Veterans Administration: Medical care and other
Action
.
.
Corporation for Public Broadcasting
National Foundation on the Arts and the Humanities 1
National Science Foundation
Smithsonian Institution!
Other agencies
Total education, training, and health, civil
National defense: Atomic Energy Commission and other
agencies
Total education, training, and health
Research and development:
Civil:
Funds appropriated to the President: Economic opportunity
program and other
Department of Agriculture:
Agricultural Research Service *
Cooperative State Research Service *
Forest Service i
Other i
Department of Commerce:

National Oceanic and Atmospheric Administration
Other
See footnotes at end of table.

558
993
80
191
89
4,676
680

538
1,197
200
229
137
5,912
751

291
1,610
125
144
173
6,586
778

41
69
364
14

65
40
84
387
15

80
54
95
412
54

114

138

142

111

126

1,405
1,002
57
139
78
35
67
111
37
67

1,435
617
61
162
101
50
95
95
48
68

1,955

15,521

17,787

17,331

15,535

17,800

17, 344

194
82
55
V

216
90
61

229
%
65

111
69

11/
75

\jv
106

59
197
108
60
164
87
55
88

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

Investment-type

1973
actual

1974
estimate

1975
estimate

outlays—Continued

OTHER DEVELOPMENTAL

EXPENDITURES—Con.

Research and development—Continued

Civil—Continued
Department of Health, Education, and Welfare:
National Institutes of Health
Alcohol, drug abuse, and mental health
Health resources
Office of Education
National Institute of Education
Social and Rehabilitation Service
Other 1
Department of Housing and Urban Development: Policy
development and research and other
Department of the Interior: Mines and minerals, geological
surveys and other l
Department of Justice
Department of Transportation:
Federal Aviation Administration l
National Highway Traffic Safety Administration
Urban Mass Transportation Administration
Other 1
Environmental Protection Agency
National Aeronautics and Space Administration l
Veterans Administration
National Science Foundation l
Postal Service
Other agencies x
Acceleration of energy research and development
Total research and development, civil

1,318
13
8
65
93
36
64
15
0

1,648
12
3
57
60
96
58
18
3

],777
132
70
5
1
113
47
154

229
24

274
46

324
56

11
0
35
67
96
144
3,280
76
432
56
80

128
50
62
15
2
11
8
3,139
85
457

17
1
3
1
82
17
3
12
8
3,196
94
494

11
0
461

7, 129

7,508

8,373

366
8,157
6
1,361

380
8,414
9
1,429

397
8,890
1
0
1,586

9,890

10,231

10,883

17,020

17, 740

19,256

42
1

48
1

50
1

6
1
48
68
-25

8
1
49
8
1
-30

99
98
86
-19

195

232

314

Total other developmental expenditures

32,750

35,772

36,914

Total investment-type outlays

63,531

69,645

75,780

National defense:
Department of Defense—Military:
Military personnel
.
Research, development, test, and evaluation
Other
Atomic Energy Commission
Total research and development, national defense
Total research and development
Engineering and natural resources surveys—civil:

Department of Defense:
Corps of Engineers—Civil
The Panama Canal
Department of the Interior:
Geological Survey
Other 1
Other agencies x
Intragovernmental transactions (—)
Total engineering and natural resources surveys—civil

See footnotes at end of table.

THE BUDGET FOR FISCAL YElAR 1975

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES

Agriculture—civil:
Department of Agriculture:
Agricultural Stabilization and Conservation Service: Expenses
and other
Sugar Act program
Commodity Credit Corporation:
Price support and related programs
Other
Farmers Home Administration:
Salaries and expenses and other J
Rural housing insurance
Agricultural credit insurance
Agricultural Marketing Service l
Other 1
___
Department of Housing and Urban Development: Disaster assistance and other
Other agencies
Total agriculture

11
7
87

17
6
9
1

12
7
92

4,271
74

1,947
14
1

248
3

14
2
-4
392
60
10
0

15
4
95
11
0
75
10
3

15
5
138
83
80
11
5

5
1
5

-57
6

-2
9

5,331

2,814

1,130

43
38

61
52

69
235
43

79
266
47

64
54
81
245
53

226
—13

288
-7

281
-18

1
494
1,090

50
513
1,176

35
544
1,271

109
7
72

159
8
67

147
9
66

503
134
17
—21

371
88
25
-24

87
100
35
-24

3,090

3,277

3,093

Business—civil:

Departmen of Commerce:
Social and economic statistics
Domestic and international business operations and administration l
Minority business development
Scientific and technical research and information products and
services 1
Maritime operating-differential subsidies and other
Other 1
Department of Defense—Civil:
Corps of Engineers
The Panama Canal
Department of Transportation:
Office of the Secretary: Railroad reorganization interim operating assistance and other
Coast Guard: Navigation aids and other 1
Federal Aviation Administration: Operations and other *
Federal Railroad Administration: Grants to National Railroad
Passenger Corporation and other
National Transportation Safety Board
Civil Aeronautics Board: Payments to air carriers
Small Business Administration:
Disaster loan fund
Business loans and investments and other
Other agencies J
Intragovernmental transactions (—)
Total business
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Labor—civil:

Department of Health, Education, and Welfare: Work incentives
Department of the Interior: Mining enforcement and safety
Department of Labor:
Comprehensive manpower assistance
Grants to States for unemployment insurance and employment services
Unemployment trust fund
Other
Employment standards
Occupational safety and health
Labor statistics l
Departmental management
Equal Employment Opportunity Commission
Occupational Safety and Health Review Commission
Intragovernmental transactions (—)
Total labor

12
9
53

215

5
5

220
7
1

64
874
28
52
37
43
1
9
28
4
-1

64
878
70
62
69
48
26

4
1
5
-2

64
908
38
73
98
5
1
3
1
53
6
-2

1,558

1,634

-136
21
6
80
-28

-180

28
2
5

-136
386
25

-39

-4

1,602
1
6
1
2
-207
*

1,877
1
8
1
8
-324
2

2,245
39
39
-335
1

1,602

1,606

2,261

237

239

240

6,544
2,751
2,374
314
502
54
63
-261

6,629
3,246
2,694
346
586
8
1
6
1
-264

6,885
2,878
2,898
41
0
608
85
1
5
-246

12,578

13,619

13,765

1,446

Homeowners and tenants—civil:

Department of Housing and Urban Development:
Housing Production and Mortgage Credit:
Federal Housing Administration
Special assistance functions
Management and liquidating functions
Other
Housing management:
Housing payments
Other
Other
Federal Home Loan Bank Board
Other agencies
Total homeowners and tenants
Veterans—civil:

Department of Health, Education, and Welfare: Payments to
social security trust funds
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care
General operating expenses
National service life insurance trust fund
Other 1
Other agencies l
Intragovernmental transactions (—)
Total veterans
See footnotes at end of table.

540-700
O - 74 - 5

THE BUDGET FOR FISCAL YEAR

1975

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
International aids:
Civil:
Funds appropriated to the President:
International security assistance
Indochina post war reconstruction assistance
International development assistance l
Contingencies
_-Department of Agriculture: Public Law 480 donations of
agricultural commodities
_
__
__
Action 1
Other agencies *
Intragovernmental transactions (—)
Total international aids, civil

National defense:
Funds appropriated to the President: International security
assistance^.
—
Department of Defense—Military: Military construction
Total international aids; national defense
Total international aids

._._

494
11

117
493
532
24

118
648
226
27

303
74
55
—50

155
78
72
—50

112
84
59
—50

1.532

645

1,422

1,223

1.877

2.967

3.743

1,951
—-

3,069

3,816

3,483

4,491

5,039

450

250

224
864
820
94
2,992

157
351
1,269
120
3,926

7,046
95
181
113
71

6,348
97
174
60
71

Welfare aidi—civil:
Funds appropriated to the President: Disaster relief
358
Department of Agriculture:
Commodity Credit Corporation: Price support and related
programs
244
Funds for strengthening markets, income, and supply
735
Child nutrition programs
602
Special milk program
91
Food stamp program_.___
2,208
Department of Health, Education, and Welfare:
Social and Rehabilitation Service:
Public assistance
7,459
Work incentives...
89
Rehabilitation services
53
Assistance to refugees in the United States
119
Other services.._.___ —
52
Social Security Administration:
Special benefits for disabled coal miners
915
Supplemental security income program
_
-Assistant Secretary for Human Development: Human
development
-Department of the Interior: Operation of Indian programs
61
Total welfare aids
_
-.12,985
See footnotes at end of table.

102

956
1» 803

869
4, 323

71
15,780

y
/o
18,171

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Other aids and special service!—civil:
Funds appropriated to the President:
Appalachian regional development programs
Economic opportunity program
Department of Commerce: Economic development and other *_
Department of Health, Education, and Welfare:
Health Services Administration:
Health services
Indian health
Alcohol, Drug Abuse, and Mental Health Administration
Social Security Administration:
Payments to social security trust funds
Supplemental security income program
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Other
Office of the Secretary: Departmental management and other. _
Other
Department of Housing and Urban Development:
Community planning and development: Comprehensive planning grants.
Model cities programs
Urban renewal fund
Other
Departmental management and other
Department of the Interior:
Bureau of Indian Affairs:
Operation of Indian programs
Miscellaneous appropriations and other
Miscellaneous trust funds
Other 1
Department of Transportation:
Federal Highway Administration: Federal-aid highways and
other trust funds
National Highway Traffic Safety Administration 1
Other
Postal Service
Other agencies 1
Intragovernmental transactions (—)
Total other aids and special services
Total current expenses for aids and special services
See footnotes at end of table.

10
593
96

1
9
543
98

25
223
95

93
116
89

15
0
15
3
92

19
0
12
5
72

2,149
41
654
242
189
240
37
55
60

2,762
349
71
2
15
5
303
435
42
11
2
62

3,105
393
758
226
326
436
1
0
10
5
79

74
590
1,018
32
30

106
590
1,150
34
50

118
220
1,150
34
65

201
60
197
24

19
9
78
31
3
9

295
79
230
9

115
102
38
1,188
76
—2, 377

139
139
45
1,999
78
-3,019

149
144
53
1,553
118
-3,300

6,029

7,869

7,074

46,544

51,012

52,166

THE BUDGET FOR FISCAL YElAR 19 75

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays—Continued
RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits—civil:
Department of Health, Education, and Welfare: Social Security
Administration:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Social Security trust funds
Department of Labor: Manpower Administration: Unemployment trust fund
Railroad Retirement Board (trust fund)

42, 170
5,162
6,648
2,391

48, 118
6,180
8,465
2,966

55, 802
7,462
9,831
3,586
—345

73
2,419

70
2,658

67
2,974

58,863

68,457

79,377

Unemployment benefits—civil:
Department of Labor: Manpower Administration:
Unemployment trust fund

4,405

4,652

6,126

Other retirement and social insurance benefits—civil:
Civil Service Commission: Civil service retirement and disability fund
Other agencies (trust funds)
Intragovernmental transactions (—)

4,523
32
-6

5,950
39
-11

7,245
46
-22

Total insurance benefits

Total other retirement and social insurance benefits
Total, retirement and social insurance benefits

4, 549

5, 978

7, 268

67,817

79,087

92,771

309

373

303

31
5
1

182
1

19
8
1

99
93
19
5
60
490
-167
80
*

122
14
0
205
80
559
-235
10
1

10
2
16
1
219
82
956
-329
10
1

1,473

1,500

1,766

OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance, and operation of physical assets:
Civil:
Department of Agriculture: Forest Service 1
Department of Defense—Civil:
Corps of Engineers—Civil
Miscellaneous accounts
Department of the Interior:
Bureau of Land Management l
Bureau of Reclamation
National Park Service 1
Other
--General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies l
Intragovernmental transactions (—)
Total repair, maintenance, and operation of physical assets,
civil
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

21,024

23,257

203
2

210
1

24,863
18
232

Total repair, maintenance, and operation of physical assets,
national defense

21,228

23,467

25,113

Total repair, maintenance, and operation of physical assets.

22, 701

24,967

26,879

188

212

310

323

328

349

118

140

156

12
161
347
137

18
187
374
154

22
217
411
178

113

133

157

470
74

616
105

663
130

76
84
6

85
82
9

100
87
17

70
57
56
66
-4
184
—538
48
219

81
56
65
68
3
247
—558
56
286

95
60
82
80
6
297
—565
62
320

2,267

2,749

3,235

Current outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Repair, maintenance, and operation of physical assets—Continued
National defense:
Department of Defense—Military:
Operation and maintenance
Naval petroleum reserve
Atomic Energy Commission
General Services Administration

Regulation and control—civil:
The Judiciary *
Department of Agriculture: Animal and Plant Health Inspection Service and other i . . . . .
Department of Health, Education, and Welfare: Food and Drug
Administration and other
Department or Justice:
General administration
Legal activities
Federal Bureau of Investigation
Immigration and Naturalization Service
Federal Prison System/
.-.—•-:
Law Enforcement Assistance Administration
Drug Enforcement Administration
Department of Transportation:
Coast Guard
Federal Aviation Administration x
Other
Department of the Treasury:
Bureau of Alcohol, Tobacco and Firearms
Customs Service !
Internal Revenue Service
Secret Service
Other 1
.
Environmental Protection Agency l
.._
Federal Deposit Insurance Corporation (trust revolving fund) _
_
National Labor Relations Board
1
Other agencies
Total regulation and control
See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 1975

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Descri ption

1973

1974

1975

Current outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration:
Civil:
International activities:
Department of State:
Administration of foreign affairs J
International organizations and conferences l
Educational exchange and other l
Board for International Broadcasting
United States Information Agency l
Other agencies
Total international activities
Federal financial activities:
Legislative Branch: General Accounting Office and other _ _
Department of the Treasury:
Bureau of Accounts
Customs Service
Bureau of the Public Debt
Internal Revenue Service
Other
Other agencies
Total Federal financial activities
Other direct Federal programs:
Legislative branch *_ _ _
Executive Office of the President
Funds appropriated to the President
Department of Commerce: National Oceanic and Atmospheric Administration and other l
Department of Defense—Civil:
Corps of Engineers
The Panama Canal
Department of the Interior:
Fuel allocation, oil and gas programs.
Other..
-Department of the Treasury: Bureau of Accounts l
Environmental Protection Agency
General Services Administration l.
Civil Service Commission:
Payment to civil service retirement and disability fund._
Employees life insurance fund
Other 1
Other agencies l
Total other direct Federal programs
Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Federal unemployment benefits and allowances
Employment Standards Administration: Special benefits.
See footnotes at end of table.

260
185
45
39
205
8

323
227
52
51
218
16

366
233
57
50
242
19

741

886

966

101

117

135

63
158
72

78
201
79

87
237
89

1,089

1,221

1,473

49
27

59
3

74
10

1,559

1,758

2,106

405
48
27

468

519
119
36

186

229

243

31
56

36
60

39
63

2
73
86
84
166

53
85
154
111
116

66
104
176
133

111

-1,080

292
-151

-205

-229

97
25

88
35

84
53

1,134

1,715

327

374
102

322
138

331

165

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

Current outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued

Other operation and administration—Continued
Civil—Continued
Retirement, unemployment, and accident compensation for
Federal employees—Continued
Department of Transportation: Coast Guard: Retired pay.
Civil Service Commission: Special payments and annuities.
Other agencies
Intragovernmental transactions (—)

76
1,899
31
—1,775

87
2,200
57
—2,403

96
3,072
66
—2,931

Total retirement, unemployment, and accident compensation for Federal employees

708

402

799

115

102

Shared revenues and grants-in-aid:
Department of Agriculture: Forest Service
Department of Health, Education, and Welfare: Consolidated education grants
Department of Housing and Urban Development: Better
Communities Act
Department of the Interior: Land management, territorial
affairs, and other
Department of the Treasury:
Customs Service
Internal Revenue Service
State and local government fiscal assistance
District of Columbia
Other agencies

1,910
560
174

184

205

77
109
6,636
182
37

88
116
6,147
190
41

94
116
6,174
232
64

Total shared revenues and grants-in-aid

7,300

6,882

9,457

Total other operation and administration, civil

11,443

11,643

13,655

National defense:
Department of Defense—Military:
Military personnel
Retired military personnel
Operation and maintenance
Family housing
Civil defense
Revolving and management funds
Other i
Selective Service System
Other agencies1

22,879
4,390
45
729
66
—1,030
-2
79
8

23,701
5,145
49
966
71
6
19
68
10

24,031
5,685
54
1,089
76
—273
6
47
11

Intragovernmental transactions (—)

—6

Total other operation and administration, national defense.

27,157

30,029

30, 719

Total other operation and administration

38,600

41,672

44, 374

See footnotes at end of table.

THE BUDGET FOR FISCAL YE'AR 19 75

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1973
actual

1974
estimate

1975
estimate

29,100

30,500

Current outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Interest:
Onpublicdebt
Other interest:
On refunds: Department of the Treasury
On uninvested funds: Department of the Treasury.
Other agencies l
Intragovernmental transactions (—)
Total other interestIntragovernmental transactions ( — ) :
Interest on Government capital in enterprises (—)
Interest received by trust funds ( - )
Trust intrafund transactions ( — )
Receipts from off-budget Federal agencies: Interest on Government capital in enterprises (—)
Proprietary receipts from the public (—)

24,167

15
7
6
3
*

183
5
1
*

206
5
9
*

15
8

19
8

221

—1,149
-5,436
*

—1,175
-6,420

—1,194
-7,140

—73
—311

—124
—235

—147
—249

Total net interest

17,383

21,335

21,991

Total other services and current operating expenses

80,951

90, 723

96,479

62
13
22

1,942
151
55
34

2,183

National defense allowances:
Civilian and military pay raises
All-volunteer force
Military retirement systems reform
Other legislation
Total national defense allowances
Allowances for civilian agency pay raises
Total current outlays

600
195,312

220,920

244,198

UNCLASSIFIED
Payments to other funds l
Allowance for contingencies
Employer share, employee retirement:
Interfund transactions
Receipts from off-bud get Federal agencies
Proprietary receipts from the public ( - )
Total budget outlays
•Less than $500 thousand.
Includes both Federal funds and trust funds.

*
300

*
500

—2,927
-9,391

—2,682
—861
-12,662

—2,840
—737
-12,458

246,526

274,660

304,445

SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS

Federal credit aids—direct loans, guarantees or insurance of private
loans, and interest subsidies—play a major role in many Government
programs. Moreover, several Government and Government-sponsored
credit agencies provide additional credit assistance outside the budget.
This analysis focuses on these credit aids as a unique class of Federal
fiscal activity—some of it within the Federal budget, but substantial^
more of it outside. The analysis:
• Pulls together in one place all of the major credit activities of
the Federal Government.
• Summarizes the expected 1973 to 1975 trends of the several
forms of Federal credit programs, and discusses their historical
growth.
• Indicates the relationship between credit programs and the
budget.
• Discusses some characteristic differences of direct loan transactions from other Federal expenditures.
• Identifies and tabulates Federal loan guarantee activity which is
outside the budget.
• Provides measures of the credit transactions of off-budget credit
agencies owned or sponsored by the Government.
• Identifies and estimates loan subsidy values.
• Aggregates the various forms of Federal and federally assisted
credit, eliminating overlapping relationships.
Federal and Federally Assisted Credit Outstanding
SBillic

320
Loans by
off-Budget""
and Sponsored
Credit Agencies
240

1964

'65

*66

Fiscal Years

'67

*68

'69

*70

'71

'72

'73

'74

'75

Estimate

THE BUDGET FOR FISCAL YEAR 19 75

Moreover, major legislative developments affecting credit programs
are also identified—including newly enacted programs, program amendments, and legislation proposed in the budget.
Considerations of space and clarity require consolidation of accounts
and programs in this analysis. Greater program detail is selectively
available elsewhere. The Treasury Bulletin now provides data on direct
and guaranteed loans outstanding for the most recently completed
fiscal year or quarter—at both the account level and program level
within accounts.1 Moreover, the Budget Appendix contains a table displaying disbursements, repayments, and net outlays for each budget
account containing direct loan transactions.2
TRENDS AND DIRECTIONS

Total credit provided by Federal direct loans, guarantees 3 of
private loans, and loans of off-budget agencies and Governmentsponsored enterprises, has risen rapidly during the past decade. This
growth reflects both the expansion of existing programs and the initiation of new ones. This trend has been marked by increased reliance
upon private financing and a conscious attempt to limit the Government's role as a direct lender. While loan guarantees have been the
principal factor in this trend, it has also involved the conversion to
private ownership of certain credit enterprises formerly included in
the budget, the creation of new enterprises of similar structure, the
statutory exclusion from the budget of certain other Governmentowned credit enterprises, and the encouragement of private financing
by paying a share of the interest costs, usually under long-term subsidy
contracts.
Even when totally outside the Federal budget and without support
from budget resources, Federal guarantees and other means of Federal
credit aid have a significant economic impact and social cost. They
alter market mechanisms in determining who gets scarce credit resources, in what order cf priority, and at what cost. As a result the
structure of the economy is altered, capital markets are affected in
major respects, and fiscal policy objectives are made more difficult to
attain.
DIRECT LOANS

Direct loans are those made directly from budget resources—either
from receipts or from funds borrowed by the Treasury or a Federal
agency. However, the lending activities of several large Government
credit agencies have recently been placed outside budget totals.
To facilitate comparisons, data for the off-budget activities of the
three of these agencies previously included in budget totals are provided in memorandum entries in the direct loan tables E-l, E-2, and
E-3. The main treatment of these direct loan activities, however,
occurs in the section entitled Credit Agencies Outside the Budget—
which accompanies table E-7.
1
2
3

See table GA-III-2, p. 124, October 1973 issue for June 30, 1973 data.
See Appendix p. 1057
Statutory usage of the terms guarantee and insurance follows no consistent pattern that distinguishes between them. Guarantee is, therefore, used frequently in this text to cover both terms.

SPECIAL ANALYSES

For the purposes of this section, then, direct loans are defined as
those which are included within budget totals.
New commitments.—Advance commitments to make direct loans
provide an indication of future trends in financial flows and their
economic impact because, in most cases, fairly long leadtimes elapse
between commitment and disbursement. In the few cases in which
no advance commitment precedes the loan disbursement, the commitment is recorded at the time of the loan outlay. Most commitments
for direct loans are used by the borrower since terms are generally
more favorable than he can obtain elsewhere.
Table E-1. NEW COMMITMENTS FOR DIRECT LOANS (in millions of dollars)
Agency or program

1973
actual

Funds appropriated to the President:
International security assistance
International development assistance
Agriculture:
Rural Electrification Administration
Farmers Home Administration
Commodity Credit Corporation
Public Law 480 long-term export credits
Commerce: Economic Development Administration
Health, Education, and Welfare:
Health programs
Education programs
Housing and Urban Development:
Low-rent public housing
Federal Housing Administration
Community development loans
Other mortgage credit
Interior
Transportation
Treasury Department
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia.
Small Business Administration:
Business and investment loans
Disaster loans
Other agencies and programs

1974
estimate

1975
estimate

332
675

290
1,027

420
58
2,609
649
52

11
1,713
739
18

21
2,549
702
16

98
628

102
394

48
133

153

908

1,012

812

24
63
114
30

18
77

13
46

283
129
176

342
134
270

349
139
253

223
1,090
128

235
180
122

235
200
110

8,749

8,876

7,008

4, 778

Total

2,373
958

7,095

2.020

4,053
479
14

5,175
758
150

5,570
758
160

MEMORANDUM

Government National Mortgage Association: Tandem plan l
Off-budget agencies:2
Export-Import Bank
Rural Electrification Administration
Rural Telephone Bank
1
2

Excluded from totals because they duplicate commitments counted elsewhere (see text).
The transactions of these Federal agencies have been excluded from budget totals by statute.
Main table REA entry includes $136 million commitments by RTB. On-budget lending activity
of these agencies appears in tables E-2 and E-3. Off-budget activity is summarized in table E-7.

THE BUDGET FOR FISCAL YEl&R 19 75

New commitments for direct loans are almost unchanged in 1974
at $8.9 billion, then decline to $7.0 billion in 1975 (see table E - l ) . The
1974 level is sustained by a $2 billion increase in foreign military
assistance loan commitments, despite several declines elsewhere.
The Export-Import Bank, excluded from budget totals by statute
on August 17, 1971, plans to increase its direct loan commitments
to $5.2 billion in 1974, and to $5.6 billion in 1975.
Partly to avoid double counting, the direct loan commitment totals
do not reflect the use of direct loan commitments resulting from the
tandem plan of the Government National Mortgage Association
(GNMA). Under this program GNMA partially supports the market
for guaranteed housing loans when required market yields exceed
the interest rate ceiling placed on these loans by the guaranteeing
agency. GNMA makes advance commitments to purchase these
loans at a price somewhat above market, subsequent!}7 reselling
them at marketable yields.
Disbursements and repayments.—Disbursements for direct loans are
of significantly different character from most other expenditures in
the budget: First, a government asset is established in the amount
of the loan; and second, the loan principal amount is usually recovered
over the term of the loan. Repayments of outstanding loans are not
classified as revenues in the budget, but are offset—against new
loan disbursements for loan revolving funds, and against general expenditures in the case of nonrevolving accounts. This netting tends
to understate the level of economic activity attributable to new loans,
particularly if repayments from old loans are large in total. Gross
loan disbursements provide a more complete measure of program
levels.
An important caveat with respect to the loan disbursement levels
displayed in table E-2 is that only about half of the totals represent
primary direct loan programs. The remainder are disbursements
relating to guarantee programs. In some of the Farmers Home Administration programs, for example, loans are customarily originated
by the agency for resale to private investors in the form of notes. In
some other programs, such as the direct loan program of the Veterans
Administration, the primary delivery of credit assistance is through a
guarantee program, but a direct loan alternative is provided in special
cases where guaranteed private loans are unavailable. Finally, direct
loan outlays are established when claims are paid under guarantee
programs and the Government receives either the original loan or the
loan collateral. The loans thus obtained are often either repaid or
sold to other investors. Recoveries from liquidation of collateral
obtained under defaulted loans are recorded as repayments, and losses
thus established are written off.
Gross data on disbursements are adjusted to reflect writeoffs,
forgiveness credits, and other noncash adjustments to loans outstanding; while repayment data are kept on a strictly cash basis. The
net difference between disbursements (adjusted) and repayments in
any year equals the change in the loans outstanding between the
start and the end of the year (adjusted for any transfers of loan
balances between accounts).

SPECIAL ANALYSES
Table E-2. DIRECT

LOAN DISBURSEMENTS AND REPAYMENTS
(in millions of dollars)
1973 actual

Agency or program

1974 estimate

1975 estimate

Disbursements

Repaymerits

Disbursements

473
584

59
122

991
693

192
169

963
1,039

195
217

519
3,125
2,563
690

150
3,832
2,910
238

4,380
1,642
739

4,240
2,454
98

4,198
2,538
702

4,741
2,342
72

66
283

1
14

115
348

41
19

75
370

40
28

625
432

640
85

700
469

700
54

650
555

650
67

290
849
64
23
63
107
20

1,585
829
68
4
*
291
69

144
1,106
33
21
77
25

590
1,054
73
5
*
110
41

272
129
176

693
109
52

341
134
270

228
727
48

183
83
51

12,401

Funds appropriated to the President:
I nternational security assistance
International development assistance
Agriculture:
Rural Electrification Administration l
Farmers Home Administration
Commodity Credit Corporation
Public Law 480 long-term export credits..
Commerce:
Economic Development Administration. _
Health, Education, and Welfare:
Health Programs
Education programs
Housing and Urban Development:
Low-rent public housing
Federal Housing Administration
Government National Mortgage Association
Community development loans
Other mortgage credit
Interior....
Transportation
Treasury Department
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
Small Business Administration:
Business and investment loans
Disaster loans
Other agencies and programs

Repaymerits

587
113
53

363
139
253

547
119
55

307
367
45

206
165
32

355
343
32

208
194
31

12,084

13,001

11,018

13,577

11,236

1,246

Total

572
885
78
5
*
124
43

1,125

1,597

1,973

3,952

1,903
92
11

1,273
20

2,392
75
9
16
2

1,229
16
5
*

2,606
830
10
5

1,291
14
9
1

Repurchases

Sales

Repurchases

Sales

Repurchases

Sales

3,325
1,194
489

651

3,850

653

4,354
377
390
39

5,008

651

653

5,160

859
19
20
46

MEMORANDUM
GNMA Tandem p l a n 2
Off-budget agencies:
Export-Import Bank 3
Rural Electrification Administration
Rural Telephone Bank 1

Repurchases and sales of loans included
above (except Export-Import Bank)
USDA: Farmers Home Administration
Housing and Urban Development
Veterans Administration
Other agencies
Total

316

417
40
4,307

*Less than 0.5 million.
1
Effective May 12, 1973 the lending activities of the Rural Electrification Administration and
the Rural Telephone Bank were excluded from budget totals by statute. Main table REA entry
includes $34 million disbursements by RTB.
2
Mortgage purchases under the Tandem plan are intended for immediate resale. Only net amounts
are included in main table.
3
These transactions excluded from budget total* by statute (beginning Aug. 17, 1971).

THE BUDGET FOR FISCAL YEAR 1975

Gross loan disbursements (adjusted)4 are expected to rise by $0.6
billion in 1974, and again in 1975, to a level of $13.6 billion. Offsets
from loan sales are detailed at the bottom of table E-2. Most such
sales are from direct loan portfolios related to guarantee programs
4

Noncash

adjusting

entries reduced

gross loan disbursements

by $718 million in 1973.

Table E-3. OUTSTANDING DIRECT LOANS (in millions of dollars)
Net change
Agency or program

1973
actual

Funds appropriated to the President:
International security assistance
415
International development assistance
457
Agriculture:
Rural Electrification Administration l
369
Farmers Home Administration
-707
Commodity Credit Corporation
-348
Public Law 480, long-term export credits.
451
Commerce: Economic development loans, __
29
Health, Education, and Welfare:
Health programs
65
Education programs
269
Housing and Urban Development:
Low-rent public housing
—15
Federal Housing Administration
347
Government National Mortgage Association...
-1,295
Community development loans
20
Other mortgage credit
-4
Interior _
19
Transportation
63
Treasury
-183
General Services Administration
-49
Veterans Administration:
Housingloans
-420
Insurance policy loans
21
District of Columbia.
124
Small business Administration:
Business and investment loans
46
Disaster loans
644
Other agencies and programs
1
Total direct loans

1974
estimate

799
524

Outstanding
1975
estimate

1973
actual

1974
estimate

1975
estimate

768 1,211 2,010 2,778
822 10,432 10,956
11,778

0)
141 - 5 4 4 1,998 2,138 1,595
-813
196 2,720 1,908 2,103
641
630 3,149 3,790
4,420
33
16
462
494
510
74
329

36
353
427
342 2,587 2,916

414

488

50
1,359

463
3,258

50
50
1,773 2,261

- 4 4 6 - 5 7 2 3,761 3,315
52
—26
833
885
-40
- 5 9 3,872 3,832
16
15
235
251
77
46
120
197
- 1 1 0 - 1 2 4 3,880 3,770
-16
-23
102
86

2,743
859
3,773
266
243
3,646
63

- 2 4 6 - 1 8 4 1,822 1,576
21
21 1,048 1,068
217
198
675
893

,392
,089
,090

101
202
12

147
149
1

1,405 1,506
1,272 1,474
547
559

317 1,983 2,341 43,891 45,874

,652
,623
560
48,215

MEMORANDUM
Off-budget agencies:2
Export-Import Bank 3
Rural Electrification Administration!____
Rural Telephone Bank 2
1

630
72
11

1,163 1,315 6,586
639
636 6,567
126
149
46

7,749
7,206
172

9,063
7,842
320

Effective May 12, 1973, the lending activities of the Rural Electrification Administration and

the Rural Telephone Bank were excluded from budget totals by statute with outstanding direct
loans of $6,494 million and $35 million respectively. Main table REA entry includes $35 million
net change by RTB.
2
These direct loans are counted in table E - 7 totals.
3 Excluded from budget totals by statute on A u g . 17, 1971.

SPECIAL ANALYSES

Since loan disbursements and repayments in foreign currencies
are not included in the budget, the tables in this analysis include only
data on loans that are both disbursed and repayable in dollars. Recent
policy has required that loans disbursed in dollars be repaid in dollars;
however, loans disbursed in foreign currencies may stipulate repayment either in dollars or in local currencies.5
Changes in outstanding direct loans.—Partly because of loan repayments, and sales of loans from loan portfolios, but also as a result of
deliberate policies to restrain Government preemption of the role of
the private credit system, outstanding direct loans from budget
accounts have shown little or no growth in recent years, and have
occasionally declined.
The net increase in direct loans for 1973 was $0.3 billion, and is
expected to be $2.0 and $2.3 billion for 1974 and 1975—bringing
the level of direct loans outstanding to $48.2 billion at the end of the
budget year (table E-3).
Direct loan growth might have been substantially greater, had not
several direct loan programs—most notably those of the Export Import Bank and the Rural Electrification Administration—been
removed from the budget in recent years. Estimates of their lending
activity appear in the memorandum section of table E-3, but are
included with other off-budget credit agencies in tables E-7 and E-8.
GUARANTEED LOANS

The most consistent growth among the various forms of federally
assisted credit has occurred in guaranteed loans. Off-budget credit
agencies, discussed later, including federally sponsored private agencies
are also a major source of growth, but their growth pattern is less
consistent due to the dominance of cyclical demands arising from
variations in credit flows to the mortgage market.
New commitments.—Most commitments for guarantees of subsidized
private loans are used, but where commitments are for the guarantee
of unsubsidized loans, the borrower sometimes finds alternative
financing. This happens most frequently in market rate housing loanguarantee programs where builders obtain commitments in advance of
sale, and the buyer and his financing needs are unknown. To the
extent that this occurs, commitments tend to overstate future loan
guarantee activity. Unused commitments nonetheless help initiate
economic activity since they facilitate the sponsor's planning and aid
him in obtaining interim financing in private credit markets.
5
G o v e r n m e n t a g e n c y direct loan t r a n s a c t i o n s d i s b u r s e d or r e p a y a b l e in foreign c u r r t n c i e s (in
millions of dollars) a r e :
1973
1974
1975

Outstanding, start of year (dollar equivalents)
Disbursements.
Repayments—dollars
Repayments—local currencies
Net disbursements
Adjustments
Outstanding, end of year

5,355
38
2
248
-212
101

5,244
14
4
156
-146

5,098
5
5
163
-163

5,244

5,098

4,935

THE BUDGET FOR FISCAL YE/AR 1975

Table E-4. NEW COMMITMENTS FOR GUARANTEED AND INSURED LOANS
(in millions of dollars)
Agency or program

Funds appropriated to the President:
International security assistance
I nternational development assistance
Agriculture:
Rural Electrification Administration 1
Farmers Home Administration
Commerce: Maritime Administration
Health, Education, and Welfare:
Health programs
Education programs
Housing and Urban Development:
Low-rent public housing
Federal Housing Administration
Community development loans
New communities fund
Transportation
For: Washington Metropolitan Area Transit Authority
General Services Administration
Veterans Administration: Housing loans and guarantees
Emergency Loan Guarantee Board
Environmental Protection Agency
Export-Import Bank x
Small Business Administration
Other agencies and programs

1973
actual

1974
estimate

1975
estimate

540
15
6

253
22

3,609
966

1,005
3,908
1,130

1,386
3,766
1,018

476
1,371

374
1,050

20
1,255

560
9,307
1,006
53
93
445
633
8,847
50

1,373
8,518

406
7,655
300
286
237
250
9,270

6,637
2,029
26

10
6
236
315
209
8,942
100
60
8,180
2,690
42

36,411

Total

218
85

38,996

39,267

3,607

4,000
500

4,500
1,000

240
9,889
2,974
40

MEMORANDUM

GNMA mortgage backed securities 2
HEW guarantees of SLMA obligations2

1
Transactions of these agencies have been excluded from budget totals by statute. However,
this does not affect their inclusion, along with budget agencies, for purposes of aggregating guaranteed loan activity.
2
Excluded from totals because they duplicate commitments counted elsewhere (see text below).

New commitments for guarantees of private loans are expected to
rise from $36.4 billion in 1973 to $39.0 billion in 1974 and to $39.3
billion in 1975.
Despite overall increases, a 2-year decline of $1.8 billion is expected
in the level of insurance commitments of the Federal Housing Administration. The rapid development of a private mortgage insurance
industry, together with regulatory changes which permit lower down
payment loans with this insurance, have resulted in reduced dependence on FHA insurance.
To avoid double counting, GNMA commitments to guarantee
private securities backed by federally guaranteed housing loans are
excluded from table E-4 totals. Likewise, HEW guarantees of obligations of the Student Loan Marketing Association (SLMA) are excluded from totals, since SLMA makes its loans to institutions only
against student loans already insured by HEW under the Student
loan insurance program. Commitments for both of these programs
are shown as memorandum entries below the total line (table E-4).

SPECIAL ANALYSES

Changes in outstanding guaranteed loans.—Loan guarantees were
increased by a net of $15.2 billion in 1973, and are expected to rise
$15.4 and $13.3 billion, respectively, in 1974 and 1975—bringing the
level of guaranteed loans outstanding to $202.8 billion at the end of
the budget year (table E-5). This figure includes $2.9 billion of
guaranteed loans held in government accounts (GNMA) as direct
loans (see table E-8).
Table E-5. GUARANTEED AND INSURED LOANS OUTSTANDING
(in millions of dollars)
Net changes
Agency or program

Funds appropriated to the President:
International security assistance
International development assistance
Agriculture:
Rural Electrification Administration 1
Farmers Home Administration
Commerce:
Maritime Administration
Health, Education, and Welfare:
Health programs
Education programs
Housing and Urban Development:
Low-rent public housing
Federal Housing Administration
Community development loans
New communities administration
Other mortgage credit
Transportation
For: Washington Metropolitan Area
Transit Authority
General Services Administration
__
Veterans Administration
Emergency Loan Guarantee Board
Environmental Protection Agency
Export-Import B a n k !
Small Business Administration
Other agencies and programs
Total guaranteed loans

Outstanding

1973
1974
1975
1973
1974
1975
actual estimate estimate actual estimate estimate

—104
52

233
129

123
22

244
473

477
602

600
625

2,520

1,005
2,498

1,386
2,630

9,436

1,005
11,934

2,391
14,564

178

1,064

680

1,260

2,324

3,004

42
949

204
1,130

326
826

47
4,788

251
5,918

576
6,744

1,065
1,860
303
74
208
-5

1,190
741
183 - 1 , 9 4 4
-217
-376
120
275
110
50
179
66

11,783
86,877
3,650
198
703
187

12,973
87,060
3,433
318
813
366

13,714
85,116
3,057
593
863
432

445
633
5,163
50

445
681
47,165
150

656
1,092
10

315
209
4,460
100
60
933
1,461
31

760
890
51,625
250
60
2,749
3,682
3,105
4,566
133
164

997
1,140
56,790
200
300
4,834
6,021
194

15,189

15,397

13,284 174,073 189,471

202,755

2,419

3,198
480

237
250
5,165
-50
240
1,152
1,455
30

MEMORANDUM
GNMA mortgage backed securities 2
H E W guarantees of SLMA obligations 2____

3,341
970

9,219

12,418
480

15,759
1,450

1
Direct loans of these agencies have been excluded from budget totals by statute. However,
this does not affect their inclusion along with budget agencies for purposes of aggregating guaranteed loan activity.
2
Excluded from totals to eliminate double counting with guarantees of underlying mortgages.

A number of guaranteed loans provide for less than 100% guarantee
of principal, but the amounts shown include both the guaranteed and
nonguaranteed portions of outstanding loan-; in order to give a comprehensive measure of the credit attributable to Federal assistance.
Due to "coinsurance/' however, the Government's contingent liability on the $202.8 billion of guaranteed loans outstanding at the
end of 1975 is reduced by $31.4 billion. (The additional liability for
interest guarantees and interest subsidy contracts is not included in
these totals.)
O - 74 - 6
540-700

THE BUDGET FOR FI'SCAL YEiAR 1975
INTEREST SUBSIDIES

The primary objective of many Federal credit programs is to provide
access to credit that would probably not otherwise be available for
certain purposes thought to be in the national interest. More favorable
terms than are otherwise available to unassisted borrowers—such as
lower interest rates, longer maturities, and higher loan-to-value
ratios—are a usual result of providing this access to credit, whether
by direct or guaranteed lending.
Assistance in meeting the costs of credit is often a further feature
of these programs. Such assistance includes submarket interest rates,
waiver of service fees or insurance premiums, and periodic payments
of interest or other debt service subsidies for guaranteed loans.
However, only the subsidy of interest is treated in this analysis. No
attempt to identify and measure other subsidy elements has been
undertaken, even though some of these may be substantial. For example, inadequate fees or premiums to cover costs of administration
and losses, waivers of such fees or premiums, or forgiveness of part or
all of loan principal are not reflected. For programs financed with
tax-exempt securities, the method used covers that part of the tax
subsidy which accrues to the borrower.
Direct loan subsidies.—Because direct loans are largely or wholly
repayable, generally with interest, the long run net costs of loan
programs usually are substantially less than the initial outlays
for capital, plus other expenses. Few direct loan programs are fully selfsupporting, however. Although some programs with statutory interest rate formulas tied to Treasury borrowing costs imply selfsupport, these are seldom designed to recover all costs—including direct
and indirect costs, adequate provision for risk or loss, or the discount
required to provide a marketable yield if the loan is sold. Moreover,
the costs of all Federal debt financing may be marginally increased b}^
individual program demands.
The net budget impact of interest concessions made to borrowers
on direct loans for any single year includes the subsidy costs arising
from both new loans and outstanding loans made in previous years.
By the same token, all new loan commitments at submarket interest
rates will add to budget outlays for all future years during which the
loan remains outstanding. Once newly subsidized loans are committed,
the future costs are largely predetermined and the net subsidy costs
become relatively uncontrollable.
Guaranteed loan subsidies.—In recent years, an increasing number of
guaranteed loan programs have provided significant subsidies in
order to help meet the needs of their borrowers. Fees or premiums to
cover part or most of administrative expenses and probable losses are
customary m guarantee programs. But absence of such charges in
some programs is an additional form of subsidy.
Long-term contracts to provide debt service payments are the most
frequently used subsidy device. These commitments sometimes cover
both interest and principal amounts, but more often cover some

SPECIAL ANALYSES

designated share of the interest cost. This approach is being used for
a growing variety of loan programs, including those for low- and
moderate-income housing, student expenses for higher education,
academic facilities, and medical facilities.
In some programs, the guaranteed loan begins as a direct loan made
at interest rates below the market, which is resold with the Government agency's guarantee, either at a discount (which provides a
marketable yield) or with a commitment to pay additional interest
in periodic installments to the private purchaser of the loan.
Just as for direct loans, the costs of subsidies for guaranteed loans
include those arising from both new and outstanding loans. New
subsidies add to net budget outlays in future years; and some meaningful measure of their ultimate net cost is needed to lend perspective to
budget decisions.
Subsidy measurement.—One way that the impact of future subsidies
could be viewed would be simply to total all future payments. However, because of interest, a dollar payable at some future date is worth
less than a dollar paid out today. Said differently, a dollar payable
in the future "costs" less, because some smaller amount invested today
at interest would grow sufficiently to meet the obligation when due.
Therefore, a simple total of future obligations would clearly overstate
the true value of the subsidy stream. A better way to measure the
ultimate value of the successive annual subsidy payments is in "present
value" terms, in accordance with the recommendations of the President's Commission on Budget Concepts. This is accomplished by
capitalizing (or discounting) future subsidies at an appropriate interest
(or discount) rate.
The selection of an appropriate interest rate might vary with
analytical objectives. The choice for discounting both direct and
guaranteed loans in this analysis is 9^A%, a rate approximately equivalent to the private market yield on long-term guaranteed housing loan
commitments in December 1973, if an allowance for guarantee costs
is added. Although private market interest rates would vary significantly according to program, borrower, and loan characteristics, the
use of a single market rate as a "proxy" for all loans facilitates analysis.
Likewise, year-to-year comparisons are facilitated when the same rate
is used for all 3 years of the table (despite the significant changes in
market rates that have occurred over the past year). The selection of
a private market rate basis (over a Treasury borrowing rate for
instance) has the advantage of valuing direct loan assets near the
price which they should bring if sold to private investors, and also
more nearly approaches the benefit provided to borrowers.
Table E-6 provides estimates of subsidy values that will result from
loan commitments made or to be made in the years 1973 through 1975.
Both the annual subsidy rates and the discounted present value of
all future subsidies are provided. However, the subsidies provided
currently—on behalf of guaranteed or direct loans already outstanding—are not covered in this analysis. While the estimates are
primarily illustrative rather than exact or comprehensive, they do
facilitate year-to-year comparisons of new subsidy commitments.

Table E-6. ESTIMATED INTEREST SUBSIDY VALUES FOR MAJOR DIRECT AND GUARANTEED LOAN COMMITMENTS
(in millions of dollars)
Borrower 1loan
terms

Agency and program

Percent

Years

Annual
subsidy
per $100
million commitments 2

Commitments
1973

1974

1975

Present value at ^ %
discount—future subsidies
committed in—
1973

1974

1975

DIRECT LOANS

Funds appropriated to the President:
Security assistance
Development assistance
Agriculture:
Price support
CCC: Public Law 4 8 0 . . . . .
Farmers Home Administration
Rural Electrification Administration'
Health, Education, and Welfare:
Capital for student loans
Higher education facilities
Housing and Urban Development:
Urban renewal
Low-rent public housing
Federal Housing Administration
VA: Insurance policy loans
Export-Import Bank7
Small Business Administration:
Business and investment loans
Disaster loan fund
Total, major subsidized direct loans

6.0
2.8

23.1
40.0

2.7
5.6

332
675

2,373
958

290
1,027

84
388

597
551

73
591

5.5
5.5
2.3
4.6
4.1

.7
33.0
2.0
35.0

5.0
5.6
2.7
4.5

2,609
649
58
763

1,713
739
11
758

2,549
702
21
758

79
366
3
346

52
417
1
344

77
396
1
344

• 1.9
3.0

10.0
30.0

4.5
5.0

88
11

130
2

1
7

26
5

38
1

6.0
0.0
5.6
5.0
6.0

3.5
1.5
30.0
15.0
6.0

1.9
5.1
3.2
3.0
2.0

790
62
479
129
4,053

1,012
153
582
135
5,175

812
45
693
140
5,570

46
4
151
31
377

58
11
184
33
481

47
3
219
34
518

6.4
5.0

9.1
3.2

2.0
2.5

223
1,090

235
180

235
200

26
75

28
12

28
14

1,995

2,801

2,384

GUARANTEED LOANS

Agriculture:
Rural housing insurance fund
Rural development insurance fund
Agricultural credit insurance fund
Health, Education, and Welfare:
Student loan insurance
Higher education facilities
Housing and Urban Development:
Urbanrenewal
Low-rent public housing
Mortgage insurance (subsidized)
Export-Import Bank: Portfolio sales'
Total, major subsidized guaranteed loans
Grandtotal
1
3

5.0
5.0
5.0

25.0
40.0
25.0

3.5
3.9
3.5

1,853
345
1,410

2,144
720
1,044

2,122
800
844

613
140
467

709
291
345

702
324
279

• 4.4
5.3

10.0
30.0

3.2
3.4

1,199
648

1,050
368

1,255

245
221

214
126

256

4.9
0.0
2.0
6.0

10.0
41.5
34.5
3.5

2.9
7.3
5.9
1.9

1,006
560
3,593
144

1,373
2,688
50

406
1,447
50

186
421
2,132
8

1,032
1,595
3

305
859
3

4,432

4,316

2,728

6,427

7,117

5,112

„

If terms vary, these are estimated averages.
Based on 9J^% value of funds.
3 Rate was 3.5% in 1973.
4
Various interest rates and maturities.
3
Effective May 12, 1973, the lending activities of the Rural Electrification Administration and the Rural Telephone Bank were excluded from the budget by statute.
• Zero interest rate applies only while student is in school plus 9 months; rate thereafter is 3% on direct loans, 7% on guaranteed loans.
T
Excluded from budget totals by statute, Aug. 17, 1971.

THE

BUDGET FOR FISCAL YEAR

1975

Loan subsidies, annual basis.—-The annual subsidy rate for direct
loan commitments made in 1973 was approximately $400 million. The
rate for 1974 commitments rises to $447 million, followed by a decline
to $434 million for 1975 commitments. This trend is largely influenced
b}^ a 1974 bulge in commitments for international security assistance
loans. For guaranteed loan commitments, the annual rate was $472
million for 1973 and is projected to decline to $447 and $291 million
in 1974 and 1975, respectively. This trend largery reflects the slowing
of commitment activity for subsidized housing.
Loan subsidies, present-value basis.—When extended to their respective maturities; the amounts of the annual subsidies cited above total
$19.2, $21.9, and $15.0 billion for 1973 through 1975 commitments,
respectively. But since these subsidies occur over time, rather than
at once, their present value is determined by discounting (at 9/2%
in this }^ear's analysis), using the procedure previously discussed. The
present values of these 1973 to 1975 commitments are thus estimated
at $6.4, $7.1, and $5.1 billion.
CREDIT AGENCIES OUTSIDE THE BUDGET

The transactions of several major Federal or federally sponsored
credit agencies, created to facilitate financing of important programs
of national interest, are excluded from Federal budget totals. The
majority of these agencies are privately owned and managed. All, however, are subject to some form of Federal supervision, and consult the
Treasury Department, either by law or by custom, in planning the
marketing of their obligations.
All of these agencies are essentially financial intermediaries, channeling funds from one sector of the capital market to another. They
borrow, under Federal auspices, mainly in the "agenc}" sector'7 of the
bond markets, and lend * these funds—for specifically authorized
purposes—either directly to lending establishments or by purchasing
loans originated by them.6
Some of these agencies began as secondary market operations, or
as facilities providing advances of reserves to financial institutions.
They had a basic function of providing liquidity to primary lenders in
times of tight mone}r conditions, either by buying their loans or making advances. These loans were then sold or repaid when capital
market conditions improved. However, in recent years, those institutions have converted their roles almost solely to raising new capital
funds for the lending establishments they serve.
Funds loaned by the agencies are not obtained entirely from borrowings in the capital markets. Sale of capital stock and retained
earnings also provide some resources for lending. Moreover, the timing
relationships of borrowing with respect to lending will vary from year
to year. Table E-7 shows both the lending and borrowing sides of these
credit activities.
The home loan banks and the three farm credit banking systerns
identified in table E-7 are actually systems of regional institutions
w^hich pool their borrowing to gain increased efficiency.
6
The program of the Government National Mortgage Association (a budget agency in HUD)
to guarantee mortgage-backed securities achieves a very similar "intermediation" result. GNMA
guarantees securities issued against privately held pools of federally guaranteed or insured mortgages. Data appear in memorandum entries of tables E—4 and E—5.

SPECIAL ANALYSIS

Table E-7. NET CREDIT ADVANCED, NET CREDIT RAISED, BY MAJOR
CREDIT AGENCIES OUTSIDE THE BUDGET (in millions of dollars)
1973
actual

1974

1975

standing

estimate

end of
1975
estimate

LENDING
Rural Electrification Administration l
Rural Telephone Bank 1
Student Loan Marketing Association
Federal National Mortgage Association 2
U.S. Railway Association
Environmental Financing Authority
Export-Import Bank
Farm Credit System:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal Financing Bank
Federal Home Loan Bank Board:
Federal home loan banks
Federal Home Loan Mortgage Corporation
Total lending

73
\]
2,449

7,842
320
1,450
28,072

60
1,163

240
1,314

300
9,063

664
578
1, 687

210
888
1,520

200
1,040
1,576

3,135
8,886
13,214

5,066
617

5,462
650

-5,490
740

11,157
3,362

11,775

636
148
970
2,110

630

639
126
480
4,889

16,087

3,484

86,801

1,834

480
4,726

970
2,035

1,450
27,127

569
555
1.518

249
766
1,423

178
969
1,497

2,844
8,471
12,042

3,706
618

5,479
486

-5,182
800

10,212
3,519

8,801

13,609

1,267

65,665

424
109
100

663
143
200

8,052
312
300

402
234

920
232

1,062
242

4,203
4,914

9,454

15,395

3,577

83,446

BORROWING
Student Loan Marketing Association
Federal National Mortgage Association
Farm Credit System:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal Home Loan Bank Board:
Federal home loan banks
Federal Home Loan Mortgage Corporation4
Total non-Federal borrowing

Borrowing reflected in Federal debt:
Rural Electrification Administration 1
Rural Telephone Bank 1
Environmental Financing Authority
Export-Import Bank:
From the public
Government equity
Federal Financing Bank
U.S. Railway Association
Total borrowing4

1
Excluded from budget totals by statute on May 12, 1973. REA had outstanding loans of $6,494
million, debt to Treasury of $6,563 million, and Government equity of $384 million. RTB had
outstanding loans of $35 million and debt of $60 million.
2
3 Loans purchased at discount are recorded at acquisition cost.
Newly enacted; not yet organized. Estimates of timing and levels of operation are unavailable.
See text discussion.
4
Excludes loans offset by sales of participation certificates (pass-through type), treated by
FHLMC as a sale of loan assets, and therefore not reflected on the corporation's balance sheet.
Net increases in outstanding PC's were $267 and $433 million in 1972 and 1973, and are projected
at 5$920 and $1,495 million for 1974 and 1975—with 1975 yearend outstandings of $3,115 million.
Federal reserve banks' loans to member banks are excluded from these totals: loans outstanding as of June 30, 1973 amounted to $1,837 million, an increase of $1,634 million from 1972. Estimates not available for other years.

THE

BUDGET FOR FI'SCAL YEAR

197 5

One recently authorized enterprise, the Student Loan Marketing
Association, began "warehousing" 7 student loans in the first half of
fiscal year 1974. The Environmental Financing authority now expects
to begin transactions within 1974. The newly enacted (December 1973)
Federal Financing Bank expects to be organized and begin financing
selected agency borrowing and lending programs, within fiscal year
1974, and is expected to achieve important gains in financing efficiency
for selected guaranteed loan programs and agency borrowing programs.
The U.S. Railway Association, just authorized by statute in January
1974, will probably not begin its $1.5 billion lending program until
1976.
Effective May 12, 1973, the lending activities of the Rural Electrification Administration and the Rural Telephone Bank were excluded
from budget totals by statute. This followed a somewhat similar
statutory exclusion of the Export-Import Bank from budget totals
effective August 17, 1971. The "debudgeting" of the REA direct loans
was accompanied by large new loan guarantee programs.
Off-budget and sponsored credit agencies as a group supplied $11.8
billion of credit funds in 1973, and expect to supply $16.1 billion during
1974. Of the $4.3 billion increase, FNMA expects to supply $2.4
billion. Anticipations for 1975 drop sharply to a net supply of funds
of $3.5 billion. The $12.6 billion decline is dominated by a turnaround
of $11 billion at Home Loan Banks—from $5.5 billion net advances
in 1974, to $5.5 billion net repayments in 1975. FNMA also expects
to supply $2.8 billion less in 1975 than in 1974. (See footnotes to table
E-7 regarding additional credit not in totals.) These estimates suggest
expectations of lower levels of mortgage commitments accompanied
by increased savings flows to thrift institutions.
Table E-7 also shows how these agencies raise their funds. Their
aggregate borrowing volume was $2.3 billion less than their lending
in 1973, but 1974 and 1975 differences are mostly of timing. Outstanding loans of these agencies are expected to total $86.8 billion by the
end of 1975, exceeding their $83.4 billion borrowings by $3.4 billion.
SUMMARY OF FEDERAL AND FEDERALLY ASSISTED CREDIT

The Federal role in the credit markets affects both the supply of
and the demand for credit. Both of these credit impacts can be aggregated, provided adjustments are made to exclude double counting
where guaranteed loans as well as Federal and agency debt instruments are in fact held directly in Government accounts or by offbudget credit enterprises.
Table E-8 shows the net new loan funds advanced to the public,
either directly from Federal budget accounts, through the Federal
assistance provided by Federal guarantees of private lending, or
through the lending of off-budget and federally sponsored agencies.
The net credit advanced under Federal auspices in 1973 was $26.1
billion. Net advances in 1974 are expected to climb to $30.1 billion,
but are to be followed by a sharp decline to $16.8 billion in 1975, according to agency projections. The decline occurs mainly in the
sponsored agencies, usually the most volatile component of the
7
That is, making short-term liquidity loans to lenders and investors against their loan portfolio
collateral.

SPECIAL ANALYSES

Federal credit aggregate, largely because Home Loan Banks are
contingent suppliers of funds to backstop changes in housing demand
and savings deposit flows.
The Federal role in the demand for credit—the funds raised under
Federal auspices—involves the credit raised through guaranteed loan
programs, that raised by federally sponsored credit agencies, and that
raised directly through Federal borrowing. These components have
been aggregated and discussed in Special Analysis C: Borrowing,
Debt, and Investment (table C-9).
Table E-8. SUMMARY OF NET CREDIT ADVANCED UNDER FEDERAL
AUSPICES (in billions of dollars)
1974
estimate

1975
estimate

Outstanding
end of
1975
estimate

0.3

2.0

2.3

48.2

15.2

15.4

13.3

202.8

-1.2

-.5

-.6

2.9

2.2
.4
-.2

3.0
.3

1.4
.3

25.2
2.2

1973
actual

Direct loans (from table E-3)
Guaranteed loans (from table E-5)
Less guaranteed loans held in direct loan portfolio:
ByGNMA
In portfolios of off-budget agencies:
ByFNMA
ByFHLMC
By Export-Import Bank
ByEFA
BySLMA

1.0

1.4

Net guaranteed loans

14.0

12.0

11.0

170.7

Credit by off-budget agencies (from table E-7) *
_

11.8

16.1

3.5

86.8

Total, credit advanced to the public under Federal auspices l

26.1

30.1

16.8

305.7

1
Excludes loans offset by sales of participation certificates (passthrough type), treated by
FHLMC as a sale of loan assets, and therefore not reflected on the corporation's balance sheet.
Net increases in outstanding PC's were $267 and $433 million in 1972 and 1973, and are projected
at $920 and $1,495 million for 1974 and 1975—with 1975 yearand outstandings of $3,115 million.

THE BUDGET FOR FISCAL YEAR 19 75
PROPOSED LEGISLATION

Legislation to provide loan guarantees for Indian small business
and economic development has been proposed and is pending in the
Congress. Other legislation is being proposed, (a) to increase the
borrowing limits under the guaranteed student loan program, and
(b) to authorize up to $2 billion in loan guarantees for investments in
railroad plant and equipment.
NEWLY ENACTED CREDIT LEGISLATION

This summar}^ lists legislation enacted during the last session of
Congress which authorizes new Federal credit programs or revises
existing programs in major respects. It excludes simple extensions in
expiring laws and increases in funds for continuing programs.
Rural Electrification Act of 1973—Public Law 92-32
Completely reorganizes legislation for the lending activities of the
Rural Electrification Administration and the Rural Telephone Bank.
Provides for 2% and 5% direct loans based on need, and provides a
new guaranteed loan program at market interest rates. Direct loans
are eligible for resale as insured loans. All direct loan activities of
REA and the RTB are placed outside the budget.
Rehabilitation Act of 1973—Public Law 93-112
Authorizes the Secreta^ of Health, Education, and Welfare, in
consultation with the Secretary of Housing and Urban Development,
to insure up to $200 million of mortgages covering construction of
public and nonprofit vocational rehabilitation facilities, including
equipment needed for their operation. Mortgages bear market interest
rates. Guarantees of tax-exempt securities are prohibited.
District of Columbia Self-Government and Governmental

Reorganization

Act of 1973—Public Law 93-198
Provides for the District to issue general obligation bonds for capital
projects and refunding of indebtedness, and for cancellation of the
District's authority to borrow from the U.S. Treasury. These authorities become effective if and when the District's self-government
charter is accepted by a majority of its voters.
Emergency Security Assistance Act of 1973—Public Law 93-199
Authorizes $2.2 billion in fiscal year 1974 for emergency security
assistance for Israel, with flexibility to provide the assistance on a
credit or grant basis, or combination of the two. Amounts in excess
of $1.5 billion require Presidential determination and report to
Congress that such assistance is important to the national interest.
Health Maintenance Organization Act of 1973—Public Law 93-222
Authorizes the Secretary of Health, Education, and Welfare to make
loans to public and nonprofit organizations for the development and
expansion of health maintenance organizations (HMO's) as a method
of delivering health services. Also authorizes loan-guarantees for
profitmaking HMO's in medically underserved areas for planning,
initial development and initial operating deficits.

SPECIAL ANALYSIS

Federal Financing Bank Act—Public Law 93-224
Authorizes creation of a Federal Financing Bank to provide for more
efficient financing of the obligations of Federal agencies. May purchase
both Agency debt issues and guaranteed loans with funds it borrows
directly in the capital markets. Is authorized to borrow up to $15
billion in the private market. The Act also requires approval by the
Secretary of the Treasury of the sources, timing, terms, and maturities
of certain Federal Agency borrowing activities.
Northeast Rail Restructuring Act—-Public Law 93-236
Provides for creation of the U.S. Railway Association which may
borrow up to $1.5 billion either from Treasury or directly in the capital
markets, to make loans to the new Consolidated Rail Corporation
(CRC), to AMTRAK; or to other railroads. USRA will be federally
owned, but its lending and borrowing are placed outside the Federal
budget. Its obligations will be federally guaranteed. CRC will be a
privately owned, for profit organization which will assume control of
selected facilities and services of the bankrupt railroads, after an
expected 18-month planning period. USRA may pay up to $85 million
to the bankrupt railroads, to continue essential services until the CRC
assumes control of rail services, and may also make interim rail property improvement loans up to $150 million, to be assumed by CRC.

SPECIAL ANALYSIS F
PRINCIPAL FEDERAL STATISTICAL PROGRAMS

This Special Analysis provides an overview of the major statistical
programs of the Federal Government. It includes the complete budgets
of four statistical agencies and those portions of other agency budgets
which are devoted to statistics.
This year there is a continuing emphasis on providing data of better
quality, timeliness, and coverage to meet demands of Government and
the public in planning and policy formulation. A new program will be
included to collect energy production, inventory, reserves, and resources information from industry. In addition, much data will be
developed as a part of the petroleum allocation program. Concerns
about economic stabilization, transportation, and the environment
have intensified the demand for improved data. The 1975 program is
particularly responsive to these concerns.
The 1975 budget for current statistics provides for an increase of
11% from $353.7 million to a level of $392.4 million. The increase for
1975 is directed primarily to new programs in economic statistics in
the areas of production and distribution of economic goods and
services, indexes of prices and wages, and measurement of the domestic
economic activity and the Nation's international transactions.
Current statistics in the social and demographic areas will increase
moderately after a recent period of relatively rapid growth. There
will, however, be a significant redeployment of resources within these
areas.
Total periodic programs will decrease in 1975, from $32.2 million to
$29.7 million; completion of major tasks associated with the 1972
economic censuses and the decennial revision of the Consumer Price
Index will be partly offset by increases in funds for the 1974 Census of
Agriculture and the preparation for the 20th decennial census of
population and housing.
Table

F-l. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (dollars in millions)
1973

Labor statistics
Prices and price indexes
Production and distribution statistics
Construction and housing statistics
National economic and business financial accounts

1974

1975

actual

estimate

57.1
12.5
64.7
11.4
21.5

64.8
13.8
70.9
13.8
26.7

69.7
16.6
90.3
15.5
28.7

167.2

190.0

220.8

72.4
11.4
15.2
18.6
12.2
20.3

81.4

83.9

Subtotal for demographic and social statistics
Total, principal current programs

Subtotal for economic statistics
Health-related statistics
Population statistics
Educational statistics
Criminal justice statistics
Social security and welfare statistics
Environmental statistics

6.7

7.4

16.2
21.3
18.7
19.4

15.4
23.4
21.2
20.3

150.1

163.7

171.6

317.3

353.7

392.4

SPECIAL ANALYSES

ECONOMIC STATISTICS

Labor statistics.—For the past 3 years funds have been provided
to design a general wage index which will be unaffected by changes
in the amount of overtime or part-time work or changes in industrial
or occupational mix. The design will be completed this year. The
1975 budget includes $500 thousand to begin data collection for the
index. It is expected that the general wage index will be published in
1976 and will appear monthly. An additional $650 thousand is provided to improve the quality of the survey which is used to establish
comparability between private and Federal compensation for similar
levels of responsibility. Particular emphasis will be placed on achieving
a better match between occupations surveyed in the private sector and
Government occupations.
In 1975, the Government's statistical agencies will take initial
steps toward improving their capability to measure personal income,
income distribution, and consumer expenditure patterns. The Census
Bureau will intensify efforts ($326 thousand) to improve the measurement of personal income. Initial emphasis will be on components of
cash income particularly public assistance payments, property income,
and employee pensions. Some experiments in seeking better ways of
measuring noncash income will also be undertaken.
As a companion project, the Bureau of Economic Analysis will
undertake to extend and maintain on an annual basis its estimates
of the size distribution of both cash and noncash personal income
($189 thousand).
The Bureau of Labor Statistics (BLS) will initiate planning for a survey
to gather current information on patterns of consumer expenditures
($100 thousand). Because of the need to relate income and expenditure
data in the analysis of consumer units as centers of economic activity,
interagency planning for improved income and expenditure data will
consider interrelationships between the income and expenditure
projects.
Prices and price indexes.—During 1975 BLS will continue work on
the major revision of the Consumer Price Index (CPI), described
below under periodic programs. Expansion of the number of items
priced monthly rather than less frequently, a program for which
funds were provided in 1974, will improve the accuracy of the current
CPI in 1975. In addition, major improvements will be undertaken in
the Wholesale Price Index and the Industry Sector Price Indexes
($400 thousand). These include reweighting the indexes to reflect
values of shipments of commodities reported in the 1972 economic
censuses, expanding the use of probability sampling techniques, and
expanding industry coverage. Progress will continue to be made in
expanding coverage for export and import price indexes ($450 thousand). The plan for 1975 is to increase coverage of export prices from
30% to 40% of total exports and of import prices from 15% to 25%
of total imports.
Production and distribution statistics.—Several programs of the
Department of Agriculture relate to the deep concern over recent food
price increases and the need for more accurate data upon which to
base forecasts of supply and demand for food and fibers. The budget

THE BUDGET FOR FISCAL YEiAR 19 75

provides $735 thousand for the Statistical Reporting Service to expand
surveys of hogs and cattle on feed to cover 95% of U.S. production.
The program to measure weekly export sales of wheat, flour, feed
grains, oil seeds, and cotton, required by the Agriculture and Consumer
Protection Act of 1973 and assigned to the Statistical Reporting
Service ($450 thousand), has been substituted for a similar effort at
the Department of Commerce. Finally, an addition of $190 thousand
provides for the evaluation of remote sensing methods using NASA
satellites to collect data on agricultural land use and potential yields.
The Economic Research Service will study the cost factors involved
in producing wheat, feed grain, and dairy products ($885 thousand).
About $5.3 million is provided for statistics and studies which relate
to the supply and demand for energy. Most of this amount will go to
Interior's Office of Energy Data and Analyses, which will become part
of the new Federal Energy Administration once the necessary legislation is obtained. These funds ($5.0 million) will be used to analyze
existing energy data necessary for the development of a U.S. energy
policy and to explore ways for improving basic statistics on energy.
The Office will assemble information on reserves and utilization, forecast supply and demand conditions, develop analytical models, and
study policy alternatives. The Bureau of Mines will use an additional
$300 thousand to enhance the existing data base on mineral resources
and the cost of extraction.
This Nation lacks adequate information on the movements of people
and commodities by various modes of transportation. Such information is crucial to the development of an efficient nationwide transportation system. In 1975, the Department of Transportation will sponsor
a Census Bureau survey of commodity movement by mode of transportation, with data on costs and on measures of effectiveness including time in transit ($1.5 million). The movement of people will be the
subject of a smaller effort ($585 thousand) designed to evaluate and
plan for changes in service and facilities. Additional projects for
measuring the effect on highway safety of various programs are
mandated by the Highway Safety Act of 1973 ($1.5 million).
The development of policies to assure economic stabilization at a
high level of employment rests to a large extent on information
about the present state of economic activity. The Census Bureau
will initiate an annual survey of industrial productive capacity ($133
thousand) which will serve also as a benchmark to the Federal Reserve's quarterly capacity measure. The Bureau of Economic Analysis
is provided with $133 thousand to study the timing of the economic
impact of governmental fiscal policy decisions.
An additional $943 thousand is proposed for the Bureau of the
Census to complete the developmental work on the industrial directory
and to apply it to statistical activities. The directory will be a computer file of industrial enterprises and establishments and will contain
address, size codes, industrial classification, form of organization and
company affiliation for each business unit listed. The directory will
improve consistency of industrial classification of firms by the statistical agencies, increase the efficiency of sample selection, and reduce the
burden on business of reporting to several different agencies information for classifying establishments by industry.

SPECIAL ANALYSES

Construction and housing statistics.—An additional $1.1 million is
provided to the Department of Housing and Urban Development for
the first full year of operation of the annual housing survey. The
regular annual program will include collection of information on
housing characteristics and quality for the Nation and for a panel of
20 metropolitan areas. Twenty new metropolitan areas will be added
in 1976 and in 1977. In this way 60 areas, including about 50% of
the Nation's population, will be included in a 3-year collection cycle.
A rural supplement will make possible a detailed analysis of rural
housing characteristics.
National economic and business financial accounts.—The 1975 budget
proposes an additional $1.3 million to improve statistics relating to
the Nation's international economic accounts. Bilateral merchandise
trade accounts, which have been developed recently with Canada,
will be extended to some other major trading partners ($450 thousand).
An international travel survey will collect such data as origin, destination, purpose, and expenditures of travel to improve the accuracy of
the balance of payments accounts and the effectiveness of U.S. travel
policy ($118 thousand). An annual survey of the sources and terms of
export financing will enhance our knowledge of the forces determining
our balance of merchandise trade ($100 thousand). Additional funds
for Customs Service ($673 thousand) will upgrade the accuracy of
the program being initiated in 1974 to collect data on imports c.i.f.
The Federal Trade Commission will be provided with $137 thousand,
in addition to funds already received, for implementation of a Line of
Business report.
DEMOGRAPHIC AND SOCIAL STATISTICS

Health-related statistics.—These activities continue to represent the
largest portion of the social and demographic statistics budget. An
increase of $5.5 million is provided for the National Center for Health
Statistics. A major feature of the 1975 program is the continued
development of a cooperative Federal-State-local health data system
under which basic data needed for Federal, State and local purposes
will be collected by State and local agencies in accordance with Federal
standards and specifications. Initial emphasis will be on vital statistics,
health manpower and health facilities statistics. The National Center
for Health Statistics will also begin work on developing the capability
to collect and analyze data on the economics of health care.
Other changes in health-related statistics reflect increases for monitoring systems in areas where Federal programs or responsibilities
have been expanding, such as on cancer surveillance ($0.8 million)
and adverse drug reactions ($0.5 million). Further strengthening of
health insurance statistics will provide more timely information on
services and costs in the Medicare program ($0.5 million). Detailed
data will be made available concerning hospitalization, physicians'
incomes and the utilization of services by type of provider, area, and
the characteristics of recipients.
Drug abuse statistics. —An overall reduction of $2.4 million for
statistics related to drug abuse reflects the elimination or curtailment
of provisional data programs and their replacement by more perma

THE BUDGET FOR FISCAL YEAR 1975

nent systems. The Alcoholism, Drug Abuse, and Mental Health
Administration in the Department of Health, Education, and Welfare
is now assuming responsibility for a greater share of drug abuse
statistical activities with a transfer of activities from the Special
Action Office for Drug Abuse Prevention.
Educational statistics.—The 1975 budget provides $15.4 million for
the statistical program of the National Center for Educational
Statistics. The largest portion of this program will finance continued
development of the national assessment of educational progress, an
ongoing program to measure educational achievement in the United
States. A continuation of the longitudinal study of the high school
class of 1972 will yield additional information about the transition
of young people from school to the world of work. A research and
developmental effort will be undertaken to ascertain the need for and
the most appropriate mechanism to gather information about the
eligibility for and participation in federally sponsored education
programs. The Center will also begin a new program to improve the
quality and timeliness of statistics on elementary and secondary
education.
Income maintenance and welfare statistics.—The major development
in this area is the continued establishment of an adequate data base for
the adult welfare programs for the aged, blind, and disabled which have
now been federalized ($1.0 million). This effort will include followup
interviews with a panel of respondents first interviewed prior to
initiation of the federalized program to provide comparisons of program
impact on different population groups. Additionally, a longitudinal
comparison of the status of beneficiaries and applicants will be obtained
through the development of a continuing sample of all applicants for
program benefits.
Criminal justice statistics.—The main programs in this field are crime
victimization surveys to develop more complete and meaningful
measures of crime against individuals and small businesses and a
"crime transaction" statistics program to monitor the functioning of
the criminal justice system. These programs will be stabilized in 1975
at the 1974 level. In addition, support will be provided in this field to
expedite and control the data flow among States and the Federal
Government ($2.0 million).
Environmental statistics.—The Environmental Protection Agency
(EPA) conducts a wide range of systematic surveys to establish sound
information on air, water, noise, and pesticide pollutants and their
impact on the environment. EPA's surveys on the effect of air pollution
on health will be expanded in 1975 to obtain an improved data base
to establish ambient air standards ($3.0 million). This $3.0 million
increase will be funded by diverting resources formerly used for
several other environmental statistical programs. A new survey in this
area will be conducted by the Bureau of Economic Analysis to provide
estimates of expenditures by industry for pollution controls ($167
thousand).

SPECIAL ANALYSES

PERIODIC PROGRAMS

1977 Census of Governments.—Preparations for the 1977 Census of
Governments will be continued in 1975. An important feature of the
1975 program will be a national survey of the information available in
offices of tax recorders and assessors to test the feasibility of using this
source as a basis for collecting taxable property value data.
1972 Economic Censuses.—The funds requested provide for the
completion of the 1972 censuses. They will enable the Census Bureau
to complete the tabulation and publication of the remaining volumes,
and to evaluate the program. The censuses of manufactures, mineral
industries, retail and wholesale trade, services, transportation, and
other business, conducted every 5 years, provide a comprehensive
description of economic activity at very detailed levels. These data
are used by Government agencies for such diverse activities as the
examination of the patterns of industrial organization, construction
of input-output tables, and benchmarking current statistical series.
Funding for 1975 will be reduced by $10.0 million from the 1974 level.
1974 Census oj Agriculture.—The 1974 Census of Agriculture will
provide data on approximately 2.5 million farms and will include
detail at the county level. Some modifications from the 1969 census
will be made in the collection of data on energy use, farm organization,
and farm operator characteristics.
Preparation for the Twentieth Decennial Census.—The funds requested for 1975 will provide for continuing preparation for the
census of population and housing to be conducted in 1980. Planning
will be initiated on improvements in the scheduling and control of
operations, further decentralization of data processing, and the
determination of changes in subject matter content and questionnaire
design. Field pretests will be planned to test new means for extending
the use of enumeration by mail in rural areas. As in previous censuses,
evaluation studies will be prepared which compare alternative techniques for collection and processing.
Intercensal demographic estimates.—This program will provide
estimates of population and per capita income for use by State and
local governments between the decennial censuses. The estimates will
be based on the 1970 Census, updated by data obtained from the administrative records of social insurance, tax, health, and other
programs.
During 1975, population and income estimates will be completed
for the States, counties, and local governments eligible for revenue
sharing. In addition to their use in revenue sharing, the estimates will
be used for the allocation of Federal and State funds, planning for
public works, schools, and other public and private programs.
Geographic support for periodic programs.—As part of its preparation
for the 1980 Census of Population and Housing, the Census Bureau
will extend and improve its standard base maps and computerized
address coding guide files. These resources, first employed in the 1970
Census, will reduce the enumeration costs of the next census and
0 - 7 4 - 7
540-700

THE BUDGET FOR FISCAL YEAR

1975

contribute to the improved reliability of the data. The Census Bureau
is assisted in this work by local governments which have found the
address coding guide to be an important new management tool.
Electronic data processing improvements.—$4.0 million is included in
the 1975 Commerce Department budget to upgrade the complex
data processing equipment of the Census Bureau. The benefits of
this improvement will include increased speed, capacity, and productivity in data processing, and a reduction of maintenance expense
and rerun time.
Revision oj the Consumer Price Index.—Major progress is being made
in 1974 toward completion of the decennial revision of the Consumer
Price Index. Decisions have been reached on methodology for rent
collection, outlet selection, and population to be covered in the revised
index. The plan is to expand the reference population to include all
consumer units within standard metropolitan statistical areas
(S MSA's) and in urban areas outside of SMSA's. Decrease in funding
for 1975 ( — $5.0 million) indicates completion of major field collection
efforts for outlet selection and reweighting the index to reflect consumer expenditure patterns of the past 2 years. Tasks on which
major progress will be made in 1975 include selection of revised item,
outlet, and specification samples. In addition, BLS will initiate data
collection from the revised sample of households from which information on rent and property taxes will be collected. The compilation
and evaluation of a test index for the rent component of the CPI
will be initiated.
Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency

1973
actual

1974
estimate

1975
estimate

CURRENT PROGRAMS

Department of Agriculture:
• Agricultural Research Service
• Economic Research Service
Statistical Reporting Service
Department of Commerce:
• Domestic and International Business Administration
• Economic Development Administration
• National Marine Fisheries Service
Social and Economic Statistics Administration l
Department of Defense:
• Corps of Engineers
See footnotes at end of table.

0.4
4.3
22.6

0.3
4.8
24.1

0.5
5.8
26.9

5.1
.5
2.6
34.1

5.1
.2
2.5
41.0

5.5
.1
2.6
50.0

1.4

1.5

1.6

SPEOML ANALYSES

Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)—Continued
Agency

1973
actual

1974
estimate

1975
estimate

CURRENT PROGRAMS—Continued

Department of Health, Education, and Welfare:
Health Resources Administration:
National Center for Health Statistics
• Other Health Resources Administration
• National Institutes of Health
• Alcoholism, Drug Abuse, and Mental Health Administration
• Food and Drug Administration
...
• Center for Disease Control
• Health Services Administration
• Office of Education
• Social and Rehabilitation Service
• Social Security Administration
• Office of Assistant Secretary for Planning and Evaluation. _
• Department of Housing and Urban Development
Department of the Interior:
• Bureau of Mines
• Bureau of Sport Fisheries and Wildlife. _
• Mining Enforcement and Safety Administration
• Office of Energy Data and Analysis
Department of Justice:
• Law Enforcement Assistance Administration
• Federal Bureau of Investigation
• Drug Enforcement Administration
Department of Labor:
Bureau of Labor Statistics
• Manpower Administration
• Employment Standards Administration
• Occupational Safety and Health Administration
Department of Transportation:
• Office of the Secretary
• Federal Highway Administration
• Federal Railroad Administration
• National Highway Traffic Safety Administration
Department of the Treasury:
• Office of the Secretary
• Internal Revenue Service
• U.S. Customs Service
Civil Aeronautics Board
Consumer Product Safety Commission
—
Environmental Protection Agency
Federal Home Loan Bank Board
Federal Power Commission
Federal Trade Commission
Interstate Commerce Commission
National Science Foundation
Securities and Exchange Commission
Special Action Office for Drug Abuse Prevention
Total current programs
See footnot es at end of table.

16.5
5.3
19.3

18. 5
4.4
18.9

24.0
2.5
20.0

6.8
2.4
3.1
1.0
15.2
1.4
18.5
3. 6
7.0

11.3
2.8
2.5
1.3
16.2
2.2
25.1
2. 7
8.3

9. }
3.3
2.5
1.3
15.4
2.4
28.2
2.7
9.3

2.4
2.2
1.5

2.6
2.4
1.6

2.9
2.3
1.6
5.0

16.5
1.5
.6

18.9
1.9
.5

20.8
2.1
.5

34.9
19.3
.5
4.8

39.1
23.6
.5
5.1

47.0
23.0
.6
5.5

.3
3.8
1.0
2.8

.5
3.8
1.1
4.4

3.2
3.8
1.0
5.9

2.8
15.5
2.3
1.4
.3
20.3
1.9
1.2
.9
.8
2.4
.5
3.8

.6
14.0
2.5
1.4
6.7
19.4
2.2
1.2
1.0
.8
2.6
.6
1.0

.1
13.8
3.1
1.5
5.1
20.1
2.4
1.4
1.1
.8
2.3
.6
1.0

317.3

353.7

392.4

100

THE BUDGET FOR FISCAL YEAR

1975

Table F-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)—Continued
Agency

1973
actual

1974
estimate

1.3

8.8

13.2
1.9
1.4
.6
2.0

1975
estimate

PERIODIC PROGRAMS

Department of Commerce: Social and Economic Statistics
Administration
1972 Census of Governments
1977 Census of Governments
1972 economic censuses
1974 Census of Agriculture
19th decennial census
20th decennial census
Intercensal demographic estimates
Geographic support
Computer, administrative, and other expenses
Department of Labor: Bureau of Labor Statistics:
Revision of Consumer Price Index

13.2

4.3

10.7

6.2

35.6

32.2

29.7

352.9

• = Covers only funds for agency's statistical activities.
1
Includes Bureau of the Census and Bureau of Economic Analysis.

].5

2.8
1.4
2.2
5.1

8.0

Total periodic programs
Total principal statistical programs

.4
3.2
8.4

385.9

422.1

SPECIAL ANALYSIS G
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH

The decline in total Federal civilian employment since January 1969
has been substantial. The overall reduction in the executive branch
from January 1969 through June 30, 1973, was 226,264 or 7.7%.
Now, a leveling off in Department of Defense employment and
increased requirements in the domestic agencies are bringing this
downward trend to an end. There is expected to be a modest increase
in total Federal employment of 20,200 between June 30, 1974, and
June 30, 1975. Expanded coverage of social security, Federal assumption of the additional workload that is associated with adult welfare
programs, increased health care, additional activities made necessary
by the energy crisis, and population growth all combine to make
some increase in employment unavoidable.
A basic objective of the New Federalism is to make the Federal
system more efficient and responsive. The New Federalism calls for
Federal support in meeting national problems and holds that State
and local governments are best able to decide on local and statewide
needs in accordance with State and local conditions and aspirations.
This means, among other effects, consolidating grants to State and
local governments and reducing the need for Federal employees to
supervise the carrying out of programs. It also means that programs
carried out directly by the Federal Government must be managed as
efficiently as possible and kept under continuous scrutiny. Close
scrutiny of the Federal workforce and its effective utilization is an
integral part of this objective.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT

Full-time permanent civilian employment as of June 30, 1973, was
2,421,700. This is 63,000 less than the 1973 level estimated in the 1974
budget. The actual decrease from June 30, 1972, to June 30, 1973,
was 83,997 or nearly 3.4%. From 1974 to 1975 full-time permanent
employment is estimated to increase by about 22,200 or slightly less
than 1%.
Nearly 7 out of every 10 full-time permanent employees in the
executive branch are found in one of three agencies: (1) the Department of Defense (both civil and military functions), 41.0%; (2) the
Postal Service, 21.4%; and (3) the Veterans Administration, 7.3%.
Table G-l displays the yearend full-time permanent employment
and projected changes, by agency.

101

102

THE BUDGET FOR FISCAL YEAR 19 75
Table G-1. SUMMARY OF FULL-TIME PERMANENT CIVILIAN
EMPLOYMENT IN THE EXECUTIVE BRANCH
As of June 30 l
Agency

Agriculture
Commerce
Defense-military functions
Defense—civil functions
Health, Education, and Welfare
Housing and Urban Development.__.
Interior
Justice
Labor
State
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency...
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other:
Agency for International Development
Civil Service Commission
Selective Service System
Small Business Administration
Tennessee Valley Authority
Panama Canal
United States Information Agency.
Miscellaneous
Subtotal

1973
actual

81,715
78,800
28,300
28,400
2
957,310
987,000
29,971
30,800
3
114,307 * 120,200
15,820
13,900
56,771
56,900
45,496
47,100
12,468
12,400
22,578
23,400
67,885
69,400
98,087
104,000
7,145
7 400
8,270
9,200
35, 721
37,800

Subtotal

Total

Current

1975
estimate

80,200
28,600
996,600
28,700
* 123,900
14,800
58,900
48,900
12,700
23,400
69,500
104,700
7,400
9,200
37, 200

80,200
29,100
995,900
29,100
« 126,200
14,200
59,400
51,000
13,000
23,400
71,300
111,400
7,800
9,200
38,000

Change
1974-75

500
-700
400
2,300
-600
500
2,100
300
1,800
6,700
400
800

25,955
170,616

25,000
170,000

25,000
173,400

24,600
181,800

-400
8,400

10,108
5,911
4,607
4,050
13,995
13,680
9,048
34,603

9,900
6,000
3,900
4,100
14,000
14,000
9,100
35,800

9,900
6, 100
3,100
4,100
14,000
14,000
9, 100
37,300

9,500
6, 300
2,200
4,300
14,400
14,100
9,100
37,600

-400
200
-900
200
400
100

1,874,417

1,918,500

1,940,700

1,963,100

5,000

2,000

5,000

22,400
3,000

1,874,417

1,923,500

1,942,700

1,968,100

547,283

564,500

537,900

534,700

25,400
-3,200

2,421,700 2,488,000 2,480,600

2,502,800

22,200

Contingencies»____
Postal Service

1974 estimate
In 1974
budget

300

1
Excludes disadvantaged youth. Public Service Careers trainees, and developmental positions under the Worker-Trainee Opportunity Program.
2
Includes an adjustment of 31,000 for civilianization program.
3
Includes an increase of 15,000 for assumption of adult welfare programs by the Federal Government, and restoration of 3,400 for planned phasedown in Public Health Hospitals in 1974 (prevented
by legislative enactment).
* Excludes 4,000 positions involved in proposed transfer of St. Elizabeths Hospital to the District
of Columbia.
5 Subject to later distribution.

Most major domestic agencies will have small increases from 1974
to 1975. A few will show larger increases in response to: (1) specific
statutory requirements for veterans medical care; (2) expanded drug

SPECIAL ANALYSES

103

enforcement activities; (3) increased requirements for social security
and health services (other than veterans); and (4) additional workload
for the Internal Kevenue Service and the Customs Service.
TOTAL FEDERAL PERSONNEL

Full-time permanent employees will account for about 90% of all
civilian employees in 1975. The remaining 10% is composed of
part-time employees, intermittent employees (those employed on an
irregular basis) and full-time temporary employees (those in positions
occupied for less than a year). "Total Federal personnel" as used in
table G-2 includes civilian employees of the legislative and judicial
branches, the civilian employees of the executive branch (as previously
described) and military personnel.
Table G-2. TOTAL FEDERAL GOVERNMENT EMPLOYMENT
As of June

Description
1973
actual

1974
estimate

1975
estimate

Civilian employment in the executive branch:
Full-time permanent l
Other than full-time permanent2
Military personnel on active duty:
Department of Defense 3
Department of Transportation (Coast Guard)

2,251,928 2,174,100 2,152,100
36,671
37,600
37,700

Subtotal
Legislative and judicial personnel

5,010,728 4,986,400 4,984,700
43,533

Total

2,421,700 2,480,600 2,502,800
300,429
294,100
292,100

5,054,261

Excludes disadvantaged youth, Public Service Careers trainees, and developmental positions
under the Worker-Trainee Opportunity Program.
2
Excludes disadvantaged summer and part-time workers under the President's Youth Opportunity Campaign.
3
Excludes Reserve components.

PERSONNEL COMPENSATION AND BENEFITS

Direct compensation of the Federal work force includes regular pay,
Sunday and holiday pay, premium pay for overtime, differentials for
night work and overseas duty, and flight and other hazardous duty
pay. Related compensation in the form of personnel benefits includes
the Government's share (as employer) of health insurance, Federal
retirement and old-age survivors' and disability insurance, and
similar payments. Some additional benefits are uniform allowances
(when paid in cash), cost-of-living and quarters allowances, and, in
the case of military personnel, reenlistment bonuses, and allowances
for subsistence.

104

THE

BUDGET FOR FISCAL YEAR

1975

Table G-3. PERSONNEL COMPENSATION AND BENEFITS (in millions of dollars)
Description

Civilian personnel costs: 3
Direct compensation
Personnel benefits
Total
Military personnel costs: 4
Direct compensation
Personnel benefits
Total

1973
actual

1974
1975
estimate l estimate *

32,988
4,866

27,500
4,700

28,600
5,600

37,854

32,200

34,200

17,700
4,371

18,000
4,500

18,000
4,600

22,071

22,500

22,600

1
Excludes Postal Service pay, reflecting completion of conversion to independent status, consistent with the Postal Service Reorganization Act of 1970.
2
Excludes costs of $2.6 billion for military and civilian pay raises in 1975. These estimates
are based on projections; actual adjustments will be determined under statutory processes.
3
Excludes Members and officers of Congress.
* Excludes Reserve components.

Obligations for civilian personnel compensation and benefits in
1975 are projected to be $34.2 billion, excluding the Postal Service.
Under the Federal Pay Comparability Act salary rates for Federal
employees under the "General Schedule" and most other statutory
pay systems are adjusted periodically so as to achieve comparability
with rates paid for the same work levels in private enterprise. The bases
for these adjustments are appropriate annual surveys conducted on a
nationwide basis by the Bureau of Labor Statistics. The estimated
costs for civilian and military pay increases for 1975 are covered by
lump sum allowances in the 1975 budget.
Current law provides that pay scales for blue-collar workers under
the Federal wage-board system are to be adjusted annually so as to
achieve rates corresponding to the prevailing area rates in private
industry.
This budget includes the President's recommendations for salary
adjustments for Members of Congress, Federal judges, Cabinet
officers, and other agency heads, and certain other officials in the
executive, legislative, and judicial branches, whose salaries have not
been adjusted for 5 years. Under the President's recommendations,
salaries for most of these officials would be increased by approximately
7.5% annually for 3 years, beginning in 1974. (The President's recommendations can be found in Part I I I cf the Budget Appendix.)
In addition, these recommendations will permit the ceiling on the four

105

SPECIAL ANALYSES

highest grade civil service salaries to be raised thus easing the compression that has built up in the 5-year period since executive level
salaries were last adjusted.
POPULATION AND GOVERNMENT EMPLOYMENT

COMPARISONS

Relative to the total employment of all governmental units (Federal, State, and local), the proportion of Federal civilian employment
has steadily declined since 1969 and, as the accompanying table
G-4 and chart illustrate, this proportion is projected to be 19%
in 1975.
Government Civilian Employment
Millions of Employees

15.0

In 1975, the ratio of Federal civilian employment, when compared
to the Nation's population, is estimated to be 13.0 per thousand
(table G-4).
Table G-4 includes temporary and part-time as well as full-time
employment.

106

THE BUDGET FOR FISCAL YEAR 19 75

Table G-4. GOVERNMENT EMPLOYMENT AND POPULATION, 1945-75
Government employment
Fiscal y

1945
1946
1947
1948
1949
1950_
1951
1952
1953
1954
1955
1956
1957
1958
1959_
I960 2
1961
1962
19633
19643
1965
1966
1967
1968
19694
19702
19712
1972
1973

All govern-

branch l
(thousands)

State and
local governments
(thousands)

3,787
2,666
2,082
2.044
2,075
1.934
2,456
2,574
2,532
2,382
2,371
2,372
2,391
2,355
2.355
2,371
2,407
2,485
2,490
2,469
2,496
2,664
2,877
2,951
2,980
2,884
2,823
2,770
2,722

3.104
3,305
3,568
3,776
3,906
4,078
4,031
4,134
4,282
4,552
4,728
5,064
5,380
5,630
5,806
6,073
6,295
6,533
6,834
7,236
7,683
8,259
8,730
9,141
9,496
9,869
10,257
10,640
11,065

6,891
5.971
5,650
5.820
5,981
6,012
6,487
6,708
6,814
6,934
7.099
7,436
7.771
7,985
8,161
8,444
8,702
9.018
9,324
9,705
10,179
10,923
11,607
12,092
12,476
12,753
13,080
13,410
13,787

Federal

1974(est.)_
1975 (est.).

2,775
2,795

(5)
(5)

units
(thousands)

._
_
.
_

Population
Federal as
percent of
all governmental
units

Total
United
States
(thousands)

Federal
employment per
1,000
population

55.0
44.6
36.8
35.1
34.7
32.2
37.9
38.4
37.2
34.4
33.4
31.9
30.9
29.5
28.9
28.1
27.7
27.6
26.7
25.4
24.5
24.4
24.8
24.4
23.9
22.6
21.6
20.7
19.7

140,468
141.936
144,698
147,208
149,767
152,271
154,878
157,533
160,184
163,026
165,931
168,903
171,984
174,882
177,830
180,671
183,691
186,538
189,242
191,889
194,303
196,560
198,712
200,706
202,677
204,819
207,049
208,837
210,404

27.0
18.8
14.4
13.9
13.9
12.6
15.7
16.9
13.5
14.0
13.4
18.9
13.4
13.5
13.2
13.1
13.1
13.3
13.2
12.9
12.8
13.6
14.5
14.7
14.7
14.1
13.6
13.3
12.9

19.5
19.0

212,776
215,513

13.0
13.0

1
Covers total end-of-year employment in full-time permanent, temporary, part-time, and intermittent positions except for summer workers under the President's Youth Opportunity Campaign; and beginning in 1970, excludes Public Service Careers program and disadvantaged workertrainees employed part time.
2
Includes temporary employees for the decennial census.
3
Excludes 7,411 project employees in 1963 and 406 project employees in 1964 for the public
works acceleration program.
4
On Jan. 1, 1969, 42,000 civilian technicians of the Army and Air Force National Guard
converted by law from State to Federal employment status. They are included in the Federal
employment figures in this table after and including 1969.
5
An official projection of State and local government employment is not available. The
percentages shown for these years are consistent with a range of reasonable estimates based on
recent trends in population and State and local government activity.

PART 2

FEDERAL SOCIAL PROGRAMS

107

INTRODUCTION
Part 2 furnishes Government-wide program and financial information in six social program areas—education, manpower, health, income
security, civil rights, and crime reduction. I t includes the special
analyses designated H through M .
The figures used in these analyses differ from the data shown under
somewhat similarly titled categories of the functional classification
used in Part 4 of the Budget and elsewhere. I n the functional classification, each activity is categorized according to its major purpose;
thus all the military spending of the Department of Defense falls into
the functional category, National defense. I n these special analyses,
however, all spending for education, health, etc., is included, even if
the activity has a different primary purpose. Thus the tabulations
here are more comprehensive with regard to these particular types of
social programs.
The Government's commitment of resources for these purposes is
evidenced in the tabulation below. This is not a complete representation, however, since some resources also go into other social programs
that are not explicitly covered b y a special analysis in this volume.
FEDERAL OUTLAYS FOR SELECTED SOCIAL PROGRAMS, 1975
[In millions of dollars]
Outlays
Description

Civilian
agencies

Special analysis:
H. Education
I. Manpower
J. Health
K. Income security
L. Civil rights
M. Reduction of crime

14,510
4,829
32,495
123,689
3,465
2,953

Subtotal

181,941

Deduction for duplications included above
Total

Department of
Defense

1,449
3,045
6,218
66
10,778

All
agencies

15,959
4,829
35,540
129,907
3,531
2,953
192,719
—22,926
169,793

Some activities of the Government serve more than one social
purpose; for example, the Medicare and Medicaid programs may be
considered as a part of both the Federal health and income security
programs. An estimate of $19,565 million for 1975 is included in both
the health and income security categories. Thus, in adding the six
categories to a total, a deduction must be made to avoid double
counting.
108

SPECIAL ANALYSIS H
FEDERAL EDUCATION PROGRAMS
Federal expenditures for education-related programs will reach
$16 billion in 1975. In school year 1972-73, Federal expenditures for
education were approximately 11% of total educational expenditure
in the United States. These programs provide aid to States and
localities, to institutions of higher education, to students, and also
include some direct Federal activities.
The amounts included are those which are directed toward supporting student-teacher relationships for the transmission of organized
knowledge or the provision of services to the community at large aimed
at expanding individuals' opportunities for professional or career
advancement. The analysis is organized by Federal goal served, by
level of education, and by type of support. The analysis this year
covers all Federal programs which have the direct support of educational activities as a major purpose, or which involve the use of
educational resources to achieve other purposes. It excludes this year
amounts for noneducational research conducted at academic institutions because they do not fall within the purposes described above.
OVERVIEW:

1975

Total Federal education outlays will reach an estimated $16 billion
in 1975, an increase of $500 million over estimated 1974 outlays, and
$2.4 billion over 1973 outlays.
Outlays for programs directed toward national education goals
are estimated for 1975 at $8.5 billion, $820 million above the estimated
1974 level. Outlays for elementary and secondary education will reach
an estimated $4.8 billion in 1975, $340 million above their 1974 levels.
Consolidated education grants will account for 40% of this total.
Outlays for higher education student support programs in the
Office of Education will reach an estimated $1.6 billion in 1975, an
increase of 25% above the 1974 level, and 60% above the 1973 level.
Substantial Federal expenditures for education are directed toward
purposes which are not primarily education. The Federal Government
invests in the education of specialized manpower for many activities,
the largest of which is defense, the second largest, health. An estimated
$7.2 billion will be spent in 1975 which are education activities but
which are directed toward other basic purposes. The 1975 estimate
is $334 million lower than the 1974 level of $7.5 billion. The largest
components of this change are not made up of reduced benefits. They
include the effects of decreases in the GI bill workload in 1975 and
decreases in health manpower education.

109

110

THE BUDGET FOR FISCAL YEAR 1975

An additional quarter billion will be provided in the form of payments for education of Federal employees or their children.
Table H-1. FEDERAL OUTLAYS FOR EDUCATION
Purpose and program

Outlays (millions)
1973
actual

Federal outlays—national education goals:
Consolidated education grants
Elementary and secondary education
Federally affected areas
Other elementary and secondary (OE)
Basic opportunity grants
Other higher education student support (OE)
Other higher education (OE)
National Institute of Education
Student grants (OASDI)
Office of Child Development
Other
Subtotal, national education goals
Federal outlays—education support for other basic purposes:
Health manpower
Veterans readjustment
_
Defense___
_____
___
Child nutrition and related
Other
Subtotal, education support for other purposes
Federal outlays—salary supplements
Total, education outlays
Amounts previously carried for academic research not directed
toward educational objectives

1974
estimate

1975
estimate

1,035
394
36
862
373
546

2,062
547
1,457
102
1,102
415
96
969
396
567

1,910
684
482
1,139
488
1,122
397
113
1,157
421
620

6,808

7,713

8,533

604
2,519
1,047
1,298
1,066

655
2,923
1,146
1,674
1,095

563
2,551
1,192
1,789
10,064

6,534

7,493

7,159

211

244

267

13,553

15,450

15,959

1,840

2,030

2,160

1,820
580
1,162

CONSOLIDATION AND REFORM

The basic provision of education remains a responsibility of States
and local communities. The Federal role lies in the realm of innovation
and improvement in the educational process, as well as insuring
equality of educational opportunity for all citizens.
To fulfill this role the Administration has adopted a program of
renewal and reform in education which includes:
• Consolidation of narrow categorical grant programs to provide
greater flexibility to States and local educational authorities in
adapting Federal funding to local requirements.
• Full funding of basic educational opportunity grants in 1975 to
increase postsecondary education opportunities for 1.6 million
students.
Consolidated education grants.—This program, expected to be
authorized by three pieces of new legislation, will merge existing
programs and will be funded for the first time for school year 1974-75.
The basic aim of this program is to restructure existing categorical

SPECIAL ANALYSES

111

authorities into grant programs that provide the States and local
authorities greater authority and responsibility in determining their
own educational priorities and focusing Federal funds on these needs.
Broad areas of emphasis will be designated for funding. It will initially
be funded through supplemental appropriations, permitting the
program to be forward funded.
Table H-2. OUTLAYS FOR CONSOLIDATED EDUCATION GRANTS
(in thousands of dollars)
1975
estimate

Outlays:
Disadvantaged
Handicapped
Vocational
Adult...
Innovation
Support services

1,260,800
38,200
382,000
56,300
85,000
88,100

Total

1,910,400

Student assistance in higher education.—The goal of equal educational
opportunity has the greatest funding priority in higher education. This
commitment is reflected by the Administration proposal to fully fund
basic educational opportunity grants in 1975 at $1.3 billion to insure
that no qualified student will be denied a college education for lack
of money.
Each student will be eligible for a grant of $1,400 less whatever
amount he and his family axe expected to contribute. The amount of
the family and student contribution will be determined annually
through a needs analysis system. Individual student grants will range
from $200 to $1,400 and by law in no case may exceed one-half of
the cost of the student's education.
More than 1.6 million needy students will be aided by the basic
grants in 1975, which will be supplemented by the existing work study
and loan programs. The college work study program at a 1975 level of
$250 million, will benefit over 520,000 students. The guaranteed
student loan program will provide loans of $1.25 billion to about one
million students, at a Federal cost of $314 million. As the demand for
loans is met by the guaranteed loan program, the direct student loan
program will decrease and provide $298 million to 330,000 students,
as repayment of previously loaned funds are used to make new
loans.
National Institute of Education.—The Institute (NIE) will continue
to explore research strategies in education, and serve as a focal point
for educational research and experimentation. This research will focus
on the areas of: (a) provision of essential skills such as reading to all
citizens, (b) improvement of the productivity of resources in education,
(c) improvement of the relationship of education to work and careers,
(d) increased capability of education systems to solve education
problems, (e) equal opportunity in American education.

112

THE BUDGET FOR FISCAL YEAR 1975

Research results will be disseminated to educational authorities so
that they can determine what will work best in their individual schools.
In 1975, NIE outlays for educational research and development will be
$113 million.
OTHER PROGRAM DEVELOPMENTS

Health manpower.—Federal health manpower assistance will be
reoriented to emphasize assisting students to finance their educational
costs, and to reduce unnecessary Federal subsidies.
GI bill.—The most recent GI bill amendments, signed into law in
October 1972, provide increased benefits to an expanded set of recipients. The legislation was designed to provide more funds for trainees
to partially meet rising costs of education. The range of entitlements to
wives and widows of servicemen killed or missing in action, and to
war-orphaned dependents was broadened to equal program benefits
available to the veteran.
Emergency school assistance.—This program, enacted in 1972, will
provide aid to elementary and secondary schools and their faculties in
the process of desegregation. The funds are available for grants
to local education agencies, for special programs and projects, and for
training.
NATIONAL EDUCATION GOALS

National education purposes are estimated to account for $8.5
billion of educational expenditures in 1975. Of this total, over $4.8
billion, or 56%, will be spent at the elementary and secondary education levels. Higher education will benefit from $3.1 billion or
36% of the total. The remainder is directed toward adult and continuing education, public libraries, research, and some cultural activities.
Most Federal expenditures for education at the elementary and
secondary school levels are provided through the activities of the
Office of Education. In 1975, Office of Education programs account for
$3.6 billion or 75% of the total level of $4.8 billion. In 1975, under
Administration proposals, $1.9 billion of Office of Education programs
are covered in the Consolidated Education Grants program.
Under programs in other agencies, an estimated $1.1 billion will
be spent in 1975 for elementary and secondary education. Office
of Child Development activities account for $421 million mostly in
the Head Start program. Under the social security system (OASDI),
persons between the ages of 18 and 22 will continue to receive benefits
if they are students. These funds are a legal entitlement of the recipient
student and will be paid directly to the student on his request. In

SPECIAL ANALYSES

113

Table H-3. FEDERAL OUTLAYS FOR NATIONAL EDUCATION GOALS BY
LEVEL
Level and program

Elementary and secondary:
Consolidated education grants
Elementary and secondary education
Federally affected areas
Emergency school assistance, general grants
Other ESA
Educational development
Education for the handicapped
Occupational and vocational education
Office of Child Development
Student grants (OASDI)
Bureau of Indian Affairs
Other

Outlays (millions)
1973
actual

1974
estimate

1975
estimate

1,820
580
4
37
142
106
355
373
224
140
161

2,062
547
106
87
191
96
335
396
252
138
266

1,910
684
482
127
106
120
121
194
421
301
149
202

3,942

4,476

4,817

542
206
287
638
159
85
160
79
43
26
156

102
470
327
305
717
71
144
146
81
41
21
213

488
510
314
298
856
57
160
72
75
39
10
202

2,381

2,638

3,081

Adult and continuing education:
Occupational and adult education (OE)
Public libraries (OE)
Library of Congress
-National Foundation on the Arts and the Humanities
Corporation for Public Broadcasting
Other

91
20
60
14
19
185

101
60
68
28
22
180

46
38
74
48
27
234

Subtotal, adult and continuing education

389

459

467

66
30

97
43

117
51

140

168

6,808

7,713

8,533

Subtotal, elementary and secondary
Higher education:
Basic opportunity grants
Work-study and supplemental grants
Guaranteed student loans
Direct student loans
Student grants (OASDI)
Construction loans and grants
Disadvantaged students and developing institutions
Occupational and vocational education
Special institutions
National Science Foundation
College teacher fellowships
Other
Subtotal, higher education

Other:
Office of Education salaries and expenses
Smithsonian Institution
Subtotal, other
Total

1975, an estimated $301 million of social security payments will be
made to eligible students.
The Federal Government additionally aids or directly provides
education for certain groups such as Indians, Cuban refugees and
residents of Pacific territories. The National Science Foundation

540-700
O - 74 - 8

114

THE BUDGET FOR FISCAL YEAR

1975

and the National Foundation on the Arts and the Humanities also
have activities at the elementary and secondary school levels.
An estimated $3.1 billion will be spent in 1975 for higher education,
an increase of 17% over estimated 1974 levels. Expenditure for higher
education will be 36% of total expenditures for education goals. The
Office of Education will provide $1.9 billion out of the $3.1 billion total.
Student support accounts for the majority of the funds for educational purposes at this level. In 1973, Office of Education student
support programs (work-study and supplementary grants, guaranteed
student loans and direct student loans) constituted 42% of the total,
$1,035 million. In 1975, under Administration proposals, Office of Education student expenditures will reach $1,610 million, an increase of
60% over the 2-year period. Social security benefits to students at
institutions of higher education will provide an additional $856 million
of student support in 1975, an increase of $139 million over 1974 levels
and $218 million over 1973 levels. Funds for college construction loans
and grants will fall to an estimated $57 million in 1975, compared to
$71 million in 1974. The focus of aid in higher education will be
shifted from institutional support to direct student support with the
full funding of the basic opportunity grants.
Outlays in 1975 for adult and continuing education and other educational activities reflect to some extent the replacement of categorical
grant programs by consolidated education grants. Various Federal
activities such as the Library of Congress and the Smithsonian Institution are included in this category. The total outlays in 1975 for these
activities are estimated at $467 million.
EDUCATION SUPPORT FOR OTHER PURPOSES

Almost half of the expenditures for education are in programs
directed to multiple purposes.
The largest single program in this category is veterans readjustment benefits (the GI bill). Veterans readjustment is a means of
redressing postservice job and educational inequities. Expenditures
reflect estimated utilization of program benefits by entitled veterans.
These outlays are estimated at $2.5 billion in 1975. This represents
a decrease of $370 million from 1974 levels. In 1975, the reduction in
Armed Forces separations leads to a decreasing workload, and therefore a reduced estimate of expenditure.
School lunch, school breakfast, school milk, and other programs
benefiting schoolchildren nutritionally accounted for $1.3 billion in
1973. In 1975, the level is expected to reach $1,789 million.
The GI bill and child nutrition programs will constitute an estimated 60% of outlays for other purposes in 1975. Of the remaining
programs, $1.0 billion or 14% will be accounted for by manpower
training for specialized purposes. The largest single program for training is defense. The Department of Defense trains personnel already in
service, and trains future service personnel through the Reserve
Officers Training Corps and in the service academies. These outlays
are estimated to reach $725 million in 1975, an increase of 5% over
estimated 1974 levels.

SPECIAL ANALYSES

115

Table H-4. FEDERAL OUTLAYS FOR OTHER BASIC PURPOSES BY LEVEL
Outlays (millions)

Level and program

1973
actual

Elementary and secondary:
Child nutrition
Comprehensive Manpower Assistance
Model cities
Other

1974
estimate

1975
estimate

1,298
159
93
126

1,674
113
93
145

1,789
143
35
159

1, 676

2,025

2,126

2,016
246
156
90
604
143
164

2,452
252
169
80
655
171
179

2,141
261
174
84
563
171
144

Subtotal, higher education

3,419

3,958

3,538

Adult and continuing education:
Agriculture extension service
Veterans readjustment
Other

186
459
69

207
419
74

207
366
58

74
1

70
0

61
3

620
22

692
19

725
19

62
4

71
1

74
4

8
3

9
9

10
2

..._

Subtotal, elementary arid secondary
Higher education:
Veterans readjustment.
Military service academies
Reserve Officers Training Corps
Alcohol, Drug Abuse, and Mental Health Administration
Health manpower (NIH)
Other National Institutes of Health
Other

Subtotal, adult and continuing education
Training of Federal military employees:
Defense
Coast Guard
Subtotal, training of Federal military employeesOther
Total

6,534

7,493

7,159

An additional $120 million in 1975 will be provided for training of
specialized personnel in State, local, and private sector activities which
are not military or health related. These include training for merchant
marine, for law enforcement officers, for persons in various scientific
fields, and for social workers.
SALARY SUPPLEMENTS

Salary supplements in the form of allowances or direct provision of
education for Federal employees or for their dependents will reach an
estimated $267 million in 1975. These supplements consist almost
entirely of Defense Department expenditures for overseas dependents
education and for off-duty education of military personnel. The two
programs will account for $257 million of outlays in 1975, an increase
of $23 million over their 1974 levels.

116

THE BUDGET FOR FISCAL YEAR

1975

Table H-5. FEDERAL EDUCATION OUTLAYS FOR SALARY SUPPLEMENTS
Outlays (millions)

Level and program

1973
actual

Total, salary supplements

1974
estimate

1975
estimate

211

244

267

Elementary and secondary
Higher education
Adult education
Other

16
8
1
2
1
3

25
1
1
25
3

238
1
2
5
3

Defense:
Overseas dependents education
Off-duty military personnel
Canal zone dependents education
State: Dependents education
USIA: Training

11
8
2
1
6

29
0
2
5
7

22
3
2
5
7

___

EDUCATIONAL PERSONNEL TRAINING AND RESEARCH

Educational personnel training and research is funded under many
programs already identified as directed to education goals. They
account for a small part of total education expenditures by the Federal
Government. Outlays for this purpose, in programs directed toward
educational goals, are estimated to reach $599 million in 1975, or 4%
of all education-related expenditures.
Table H-6. FEDERAL OUTLAYS FOR PERSONNEL TRAINING
AND RESEARCH IN EDUCATION
Outlays (millions)
Program

Education personnel training:
Educational development
Emergency school assistance
Education for the handicapped
College teacher fellowships (OE)
Occupational, vocational and adult education
Office of Child Development
National Science Foundation
Other

1973
actual

1974
estimate

1975
estimate

11
1
6
28
3
0
1
5
1
8
20
7

16
0
1
6
24
27
1
3
1
9
1
4
1
0

62
2
1
43
1
4
36
1
9
1
1
18

Subtotal, education personnel training

25
3

29
2

224

Educational research:
Educational development
Education for the handicapped
Occupational and adult education
National Institute of Education
National Foundation on the Arts and Humanities.
National Science Foundation
Other

16
1
26
54
3
6
1
6
20
1
1

11
3
2
5
46
96
26
3
5
1
5

8
5
3
5
3
5
13
1
3
9
38
30

Subtotal, educational research

29
7

34
7

35
7

Total

54
1

63
0

59
9

SPECIAL ANALYSES

117

The Office of Education funds most of the educational training and
the National Institute of Education funds a significant part of educational research through a wide range of programs. The Office of
Education will provide 79% of the money for personnel training in
1975; the National Institute of Education will provide 30% of the
funds for research in 1975.
EDUCATIONAL LEVEL OF SUPPORT

Almost half of Federal funds for education are directed to elementary and secondary education. Of this total 70% are provided through
programs with directly educational goals. Some 42% of funds go to
higher education, with 46% in programs whose primary goal is
education.
Table H-7. FEDERAL OUTLAYS FOR EDUCATION BY PURPOSE
AND LEVEL
Level and program

Outlays (millions)
1973
actual

Elementary and secondary:
Education _. . . _
Other basic purposes
Salary supplements
Total, elementary and secondary
Higher education:
Education
Other basic purposes
Salary supplements
Total, higher education
Adult and continuing education:
Education
Other basic purposes
Salary supplements
Total, adult and continuing education
Other:
Education
Other basic purposes
Salary supplements
Total, other
Total, outlays for education

1974
estimate

1975
estimate

3,940
1,676
186

4,476
2,025
215

4,821
2,126
238

5,802

6,716

7,185

2,381
3,419
1

2,638
3,958
1

3,083
3,538
1

5,801

6,597

6,622

258
716
2
1

380
702
25

398
61
3
25

995

1,107

1,054

219
808
3

21
3
864
3

1,030

1,098

15,450

15,959

111
115
3
955
13,553

Most of the support to elementary and secondary education reaches
the educational process through grants to States and to local educational agencies. Consolidated education grants for education will remove the inefficiencies imposed by the narrow categorical grants.

118

THE BUDGET FOR FISCAL YEAR 19 75

Table H-8. FEDERAL OUTLAYS FOR ELEMENTARY AND SECONDARY
EDUCATION BY SUBLEVEL AND TYPE OF SUPPORT
Outlays (millions)
Sublevel and type of support
1973
actual

Total, elementary and secondary

1974
estimate

1975
estimate

5,802

6,716

7,185

Early childhood
Elementary and secondary
Supporting services
Consolidated education grants
Disadvantaged
Handicapped
Vocational
Adult
Innovation
Support services

491
5,070
241

568
5,820
328

666
4,302
307
1,910
1,261
38
382
56
85
88

Current operations
Facilities and equipment
Student support
Education personnel training
Education research
Consolidated education grants
Disadvantaged
Handicapped
Vocational
Adult
Innovation
Support services

5,037
140
284
194
147
_

.
5,807
166
326
186
231

4,277
216
365
202
215
1,910
1,261
38
382
56
85
88

The outlays in support of higher education are generally not
channeled through a State or local government. Instead, grants or loans
are made directly to the educational institution or to the student who
then chooses which institution to attend. Federal support to higher
education is undergoing a transition from emphasis on institutional
support to one of direct student assistance. In 1975 an estimated
$5,149 million or 78% of total outlays for higher education will be
direct grants or subsidies on loans to students. Some $1.4 billion are
estimated to go to institutions for current operations or facilities and
equipment.
Table H-9. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY TYPE OF
INSTITUTION AND T\PE OF SUPPORT
Outlays (millions)
•
1974
1975
estimate
estimate

Type of institution and support

1973
actual

Total, higher education

5,801

6,597

6,622

2-year institutions
Other undergraduate
Graduate and professional and other

1,302
3,220
1,279

1,614
3,662
1,321

1,616
3,780
1,226

1,010
491
4,221
46
33

1,137
395
4,948
43
74

1,064
312
5,149
32
65

Current operations.. _
Facilities and equipment
Student support
Education personnel training
Educational research

_
_

_ __

SPECIAL ANALYSES

119

There is a shift also in the level of educational institutions benefiting
from Federal education expenditures. Outlays for 2-year and 4-year
institutions will increase $1.9 billion from 1973 to 1975, almost
entirely accounting for the increase in Federal outlays for higher
education over the 2-year interval. More than half of higher education
funds are estimated to go to 4-year undergraduate institutions in
1975. Of the remainder, $1.6 billion will go to 2-year institutions and
$1.2 billion to graduate and professional schools. Graduate and
professional education will account for 28% of total higher education
support in 1975.
STUDENT SUPPORT

About $5.1 billion of student support will be available in 1975,
88% of which will be undergraduate student assistance. The GI bill
will provide 43% of student assistance. The Office of Education will
provide another 3 1 % or an estimated $1.6 billion through various
grant, loan, and work-study programs.
The Office of Education estimates that 3.5 million student grants
and loans will be made in 1975 under its programs. Students receiving
aid under more than one program account for at least one-third of
this total. The number of students aided is estimated to increase
about 25% from 1974 to 1975 after allowances for program overlap
are taken into account.
Table H-10. STUDENT SUPPORT BY AGENCY: FEDERAL OUTLAYS AND
NUMBERS OF STUDENTS
Students (thousiands)

Outlays (millions)
1973
actual

1974
estimate

1975
estimate

Undergraduate:
Health, Education, and Welfare:
Office of Education. _ _ _
Social Security Administration.
Health agencies and other
Veterans Administration
Defense
Justice _
_
Other

999
638
53
1,716
113
31
41

1,162
717
60
2,091
125
34
62

1,565
856
42
1,825
130
33
41

Subtotal, undergraduate x__

3,591

4,251

93
36
137
300
20
18

108
37
133
362
13
16

111
39
138
316
10
17

604

669

1974
estimate

1975
estimate

4,492

Graduate:
Health, Education, and Welfare:
National Institutes of Health. _
Office of Education
Other
Veterans Administration _ _
National Science Foundation. _
Other

1973
actual

631

Subtotal, graduate l
Total
1

2,395
469
60
1,056
47
77
17

2,707
484
59
1,249
48
77
15

3,370
508
44
1,046
50
78
16

57
160
16
185
3
25

51
146
15
214
2
23

43
155
15
179
2
20

_ _

Student totals not shown because some students receive awards under more than 1 program.

120

THE BUDGET FOR FISCAL YEAR 19 75
OUTLAYS BY EDUCATIONAL SUBLEVEL

In order to provide data in a form comparable with previous education special analyses for 1973 and earlier, the following tables are
provided which display program and agency outlays by education
sublevels in 1973, 1974, and 1975.
Table H-11. FEDERAL OUTLAYS FOR ELEMENTARY AND SECONDARY
EDUCATION BY AGENCY
Outlays (millions)
Sublevel, agency and program

1973
actual

Early childhood:
Child nutrition and related
Head Start
Other

1974
estimate

1975
estimate

39
373
79

59
396
113

127
421
118

491

568

666

1,232
199

1,574
235

1,619
257

1,820
580
4
37
41
355
224
140
159
93
44
27
115

2,062
547
106
87
38
335
252
138
113
93
51
24
165

1,910
684
482
127
106
19
194
301
149
143
35
44
23
122

5,070

5,820

6,212

Supporting services:
Office of Education:
Educational development
Education for the handicapped
National Institute of Education
Child nutrition and related

142
52
20
27

191
42
48
41

120
74
64
43

Subtotal, supporting services

241

328

307

5,802

6,716

7,185

Subtotal, early childhood
Elementary and secondary:
Child nutrition and related
Defense
Office of Education:
Consolidated education grants
Elementary and Secondary Education
Federally affected areas
Emergency school assistance, general grants
Other ESA
Education for the handicapped
Occupational and vocational education
Student grants (OASDI)
Bureau of Indian Affairs
Comprehensive manpower assistance
Model cities
Veterans readjustment
National Science Foundation
Other
Subtotal, elementary and secondary

Total

SPECIAL ANALYSES

121

Table H-12. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY AGENCY
AND PROGRAM
Sublevels, agency and program

Outlays (millions)
1973
actual

2-year institutions:
National Institutes of Health
Office of Education:
Basic opportunity grants
Other student support
Occupational and vocational education
Other
Student grants (OASDI)
Veterans readjustment
Other
Subtotal, 2-year institutions
Other undergraduate:
Military service academies
Reserve officers training corps
Health manpower (NIH)
Office of Education:
Basic opportunity grants
Work-study and supplementary grants
Guaranteed student loans
Direct student loans
Construction loans and grants
Disadvantaged students and developing institutions
Other
Student grants (OASDI)
Special institutions
Bureau of Indian Affairs
Community development (HUD)
Veterans readjustment
National Foundation on the Arts and Humanities
National Science Foundation
Other
Subtotal, other undergraduate
Graduate and professional:
Alcohol, Drug Abuse, and Mental Health Administration
Health manpower (NIH)
Other National Institutes of Health
College teacher fellowships (OE)
Other Office of Education
Social and Rehabilitation Service
Howard University
Veterans readjustment
National Science Foundation
Other

1974
estimate

1975
estimate

192
10
6
56
69
759
66

5
1
215
16
4
77
76
982
67

244
217
72
78
93
857
55

1,302

1,614

1,616

246
16
5
64

252
19
6
10
7

21
6
14
7
16
2

423
14
2
245
18
2
69
67
569
53
20
1
8
957
5
1
7
59

5
1
367
16
9
260
56
18
1
90
61
4
49
1
9
1
8
1,108
1
0
1
9
72

244
364
19
8
254
44
18
2
10
3
763
40
22
7
968
1
2
20
34

3,220

3,662

3,780

90
540
14
4
26
95
30
26
300
26
2

80
485
12
7
2
1
14
1
27
32
362
22
6

84
437
11
7
1
0
15
1
27
35
316
1
9
1
2

Subtotal, graduate and professional

1,279

1,321

1,226

Total

5,801

6,597

6,622

122

THE BUDGET FOR FISCAL YEAR 19 75

Table H-13. FEDERAL OUTLAYS FOR ADULT EDUCATION AND OTHER
ACTIVITIES BY AGENCY
Sublevel, agency and program

Outlays (millions)
1973
actual

Adult basic and extension:
Agriculture extension service
Office of Education
Veterans readjustment
Other
Subtotal, adult basic and extension
Public and national library services:
Library of Congress
Library resources (OE)
National Library of Medicine
Other
Subtotal, public and national library services
Training of Federal, State, and local civilian employees:
Commerce
Justice. _
Other
Subtotal, training of public civilian employees
Training of Federal military employees:
Defense
Coast Guard
Subtotal, training of Federal military employees
Foreign educational activities:
Agency for International Development
Defense
State
Subtotal, foreign educational activities
Other:
Office of Education, salaries and expenses
National Institute of Education
Corporation for Public Broadcasting
National Foundation on Arts and Humanities
Smithsonian Institution
Other
Subtotal, other
Total

1974
esti mate

1975
estimate

16
8
9
1
459
70

207
11
0
419
83

207
46
366
67

806

810

686

60
20
24
24

68
60
24
49

74
38
24
58

18
2

21
0

194

8
7
14

8
1
0

1
0
1
1
37

617
22

688
1
9

723
1
9

639

707

742

1
3
27

1
4
29

2
32

3
1

66
1
9
1
9
14
30
19
6

97
38

\]7

22
28
43
12
2

4
1
27
48
5
1
14
5

317

30
5

48
3

1,950

2,137

2,152

123

SPECIAL ANALYSES
Table H I 4. FEDERAL FUNDS FOR EDUCATION BY AGENCY
Agency

Legislative branch:
Library of Congress
Funds appropriated to the President:
International Development Assistance
Other
Agriculture
Commerce
Defense—Military
Defense—Civil
Health, Education and Welfare:
Office of Education
Other HEW
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency
G eneral Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other Independent Agencies:
Action
Corporation for Public Broadcasting
National Foundation on the Arts and Humanities..
National Science Foundation
Smithsonian Institution
United States Information Agency
Canal Zone
Total

1974
1975
estimate estimate

Budget
authority
(millions)
1975

Outlays (millions)
1973
actual

24
47
1,488
1
1
1,242
6

22
52
1,886
1
4
1,373
7

1
8
11
2,001
1
5
1,442
7

79
76
1,987
1
6
1,451
7

4,992
2,338
15
5
194
5
1
19
5
33
26
3
6
1
0
3
4
2,519

5,685
2,625
19
2
192
6
1
13
1
36
2
1
7
5
9
3
2
2,923

6,222
2,748
33
207
6
1
13
4
40
22
25
6
6
3
2
2,551

6,004
2,416
36
210
60
43
4
1
24
23
6
5
3
2
2,549

22
1
9
3
1
7
1
30
3
6

2
1
22
53
68
43
3
7

23
27
82
68
5
1
3
7

24
55
102
72
52
3
1
9

13,553

15,450

15,959

15,434

SPECIAL ANALYSIS I
FEDERAL MANPOWER PROGRAMS
SCOPE OF THIS ANALYSIS

Federal manpower programs aim to increase the skills and employment opportunities of individuals already in the work force and of
persons who desire to join the work force but lack vocational preparation or face other employment barriers. Manpower programs provide
skill training, rehabilitation, transitional employment experience, job
placement assistance, related child care and social and health services.
Manpower programs are distinguished from educational programs
by their operating characteristics. Generally, they: (1) Operate outside the normal educational process, (2) provide skill training for nonprofessional jobs, (3) provide services for less than 1 year, and (4) target on the disadvantaged sector of the population.
This analysis covers all programs classified as manpower training
and employment services in the functional classification of the budget.
It also includes some programs directed toward similar objectives
from other functional classifications such as income security, national
defense, and veterans benefits and services.
The 1975 budget provides $4.8 billion for manpower programs.
Anticipated enrollment in manpower program training and employment (excluding in-school work experience) in 1975 is 2,286,000, up
13% from 1974.
MAJOR PROGRAM DELIVERY CHANGE

The delivery system for the Nation's largest single manpower
appropriation was radically changed in December 1973 with the
passage of the Comprehensive Employment and Training Act (CETA).
CETA is the culmination of 5 years of effort to secure legislation to
reform a score of categorical manpower programs authorized primarily
by the Manpower Development and Training Act and Title I of the
Economic Opportunity Act. CETA replaces those statutes and provides for distribution of most funds in flexible grants to States and
local governments. It is a substantial achievement in the movement
toward special revenue sharing goals of decentralized and decategorized
domestic programing. Funds are allocated among States and localities
by a formula taking into account funding levels from prior years
and relative proportions of the unemployed and of low-income
adults. The act further authorizes nationally directed programs for
Indians and migrant and seasonal farmworkers, continues the Job
Corps residential training program, and provides for continued
experimentation, research, and development of improved manpower
planning and operating techniques.
Appropriations under this legislation are reflected in the budget
documents under Department of Labor, Comprehensive Manpower
Assistance (CMA).
124

SPECIAL ANALYSES

125

PROGRAM APPROACHES

Manpower programs have traditionally been classified into five
major approaches to summarize the delivery of services. Those
approaches and the activities included in each are as follows:
—On-the-job training—provides training for regular job vacancies
generally by reimbursing employers for the added costs of hiring
and training low-skilled individuals.
—Institutional training—provides instruction in vocational skills
and remedial education in a classroom setting.
—Vocational rehabilitation—helps individuals overcome physical
and mental handicaps.
—Work support—provides w° r k experience for youth and older
workers as well as transitional public service employment for
unemployed individuals.
—Labor market services and program direction—encompasses services to assist individuals in obtaining employment plus administration of the range of manpower programs. It includes child care,
supportive services, counseling, and the range of Employment
Service activities.
The three principal measures used to describe the delivery of program services are:
—man-years of service, which measures the average year round
enrollment;
—new enrollees, which counts the total number of individuals
who are enrolled throughout the year.
—outlays, which measures the level of expenditures during a fiscal
year;
The estimated distribution of resources among approaches is
tentative. The actual use of most of the funds under CMA may vary
substantially since program decisions are now the responsibility of
States and localities. The 1975 CMA estimates are based on a combination of 1974 estimates, experience under related pilot activities, and
the preferences of local officials as outlined in preliminary 1975 plans.
The following charts summarize man-years of service, new enrollees
and outlays by approach.

126

THE BUDGET FOR FISCAL YEAR 1975

Man-Years of Service in Manpower Activities
Milli.

Millions

3.0

-3.0

2.0

-2.0

1.0-

-f.0

1968

1969

1970

1971

1972

1973

J974

1975
Estimate

Fiscal Years

New Enrollees in Manpower Activities
Millions

Millions

ffiWtft- 3.0

3.0 —

-2.0

—

f.0

1968

1969

Fiscal Years

1970

197)

1972

1974

1975
Estimate

1.0

127

SPECIAL ANALYSES
Outlays for Federal Manpower Activities

Labor Market Service
and Program Direction

(964

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974

Fiscal Y e a n

1975

Estimate

On the job training (OJT).—OJT involves the enrollee in a real
work-setting. It encourages the employer to continue the individual
on the regular employment rolls once reimbursement of extraordinary
costs has ended.
Table 1-1. ON-THE-JOB TRAINING
(outlays in millions, individuals in thousands)
Individuals served
Outlays

Program
1973
actual

Comprehensive manpower assistance
Work incentive program
On-the-job training for veterans..
Other
Total.

Man-years

1974 1975 1973
est.
est. actual

247
33
199
12

211
44
245
12

302
45
241
6

491

512 594

120
6
106
3

New enrollees

1974 1975 1973
est. est. actual

91
12
123
3

129
12
115
2

235 229 258

229
24
88
9

1974 1975
est. est.

190
18
99
8

386
16
66
2

350 315 470

Institutional training.—Included in this approach is the Job
Corps, a specialized program for youth aged 14 to 21 conducted in a
residential setting. Now authorized by the CETA, in 1975 the Job

128

THE BUDGET FOR FISCAL YEAR 19 75

Corps will continue to be administered federally, but management
will be largely decentralized to the regional offices of the Department
of Labor.
Social services institutional training programs are operated by
State welfare agencies for public assistance recipients.
Other institutional training includes programs for Indians, prisoners,
and others.
Table 1 2 . INSTITUTIONAL TRAINING
(outlays in millions, individuals in thousands)
Individuals served
Program

Outlays

Man-years

Total

1974
est.

598
71
58
55

587
49
41
51

633
50
6
1
4
1

88
30
13
6
1
9

88
1
7
17
4
1
4

782

Comprehensive manpower assistance
Work incentive program
Social services training
Other

1975
eat.

1973
actual

1974
est.

New enrollees

1973
actual

1975
est.

728

785

300

266 305

17
1

\7
19
5
1
2

1973
actual

1974
est.

1975
est.

204 214
1 1 30
0
600 500
49 45

338
32
550
38

954

958

789

Vocational rehabilitation.—-Under the HEW Federal-State VR
program, State rehabilitation agencies determine client needs and
either deliver or purchase services on a case-by-case basis.
The Veterans Administration vocational rehabilitation program
provides similar services to persons with a service-connected disability. In addition to counseling, training, and subsistence allowances,
veterans receive disability compensation, tuition, books, and fees.
Table 1-3. VOCATIONAL REHABILITATION
(outlays in millions, individuals in thousands)
Individuals served
Program

Outlays

Man-years

New enrollees

1973
actual

HEW vocational rehabilitation. __
Veterans vocational rehabilitation.
Total

1974
est.

1975
est.

1973
actual

1974
est.

1975
est.

1973
actual

1974
est.

1975
est.

636
88

715
88

770
94

682
15

704
15

735
15

503
19

535
19

554
18

724

803

864

697

719

750

522

554

572

Work support.—Under CETA, in addition to traditional postschool work experience, transitional public service employment is
authorized both for regular prime sponsor grants and for special grants
for areas with high unemployment. In-school and summer work

SPECIAL ANALYSES

129

support are also authorized, providing income and work experience as
well as helping ease the adjustment to regular adult employment.
Similar in-school and summer programs are also supported by the
Department of Health, Education, and Welfare and the Civil Service
Commission.
Table 1-4. WORK S U P P O R T (outlays in millions, individuals in thousands)
Individuals served
Program

Outlays
1973

N e w enrollees

1975

1973

1974

1975

1973
ctual

1974

289

394

189

199

256

554

647

985

311

573

139

135

225

250

631
29
108

29
98

148
8
67

119
9 "~~9
72
38

188
28
76

104
32 """30
70
53

1,666 1,368 1,094

483

498

Comprehensive manpower assistance—in-school
295
Comprehensive manpower assistance—postschool
248
Emergency employment assisttance
1,005
Work incentive program
15
Other
103
Total

1974

Mein-years

442

1975

981 1,078 1,318

Labor market services.—Labor market services is composed of:
Job placement assistance; antidiscrimination activities; and supportive services.
Job placement assistance.—The Federal-State Employment Service
(ES), is the major deliverer of job placement assistance. Placement services are provided for the general labor force, including
the disadvantaged.
Employment Service offices use computerized job banks in most
major labor markets.
The WIN program will register an estimated 816,000 recipients of
Aid to Families With Dependent Children (AFDC) in 1975 and place
about 125,000 of these directly into jobs. Another 75,000 will be
placed in jobs following WIN training.
In the Department of Defense, Project Transition provided assistance to servicemen prior to discharge. Transition in 1975 becomes a
part of the regular military responsibility, rather than a separately
funded program.
Antidiscrimination.—These activities reduce barriers to the employment of minorities, women, and older workers. Not included here are
individual agency civil rights activities.
The Equal Employment Opportunity Commissions7 outlays increased 152% from 1972 to 1975, rising from $21 million to $53 million.
The Office of Federal Contract Compliance (OFCC) in the Department of Labor, in cooperation with 18 major Federal contracting
agencies, assures that affirmative action plans are undertaken by
Federal contractors to provide equal employment opportunities for
minorities and women.

0 - 7 4 - 9
540-700

130

THE BUDGET FOR FISCAL YEAR 19 75

Table 1-5. JOB PLACEMENT ASSISTANCE AND ANTIDISCRIMINATION
(in millions of dollars)
Outlays
1973
actual

1974
estimate

1975
estimate

Total

431
59
14
37
40
57

428
75
17
39
23
75

424
76
19
42
11
91

638

Employment service
Work incentive program
Food stamp registration requirement
Labor market information
Other placement assistance
Antidiscrimination

657

663

Supportive services.—These services are provided to facilitate the
ability of individuals to participate in training activities or to take and
hold jobs.
Employment-related day care is provided through two major
programs—the WIN and Social Services for recipients of AFDC.
Social Services provides day care services directly and also supports
child care through an income disregard to the AFDC payment.
Table 1-6. SUPPORTIVE SERVICES (outlays in millions of dollars)
Program

Child care:
Work incentive program
Aid to families with dependent children
Other

Outlays
1973
actual

1974
estimate

1975
estimate

41
378
16

45
443
17

46
532
8

435

505

586

48
405
62

50
386
44

51
416
61

Subtotal

515

480

528

Total

950

985

1,112

Subtotal
Other supportive services:
Work incentive program
Vocational rehabilitation
Other

Federal program direction, research and support.—Table 1-7

summarizes the Federal staff effort in headquarters and the field.
Generally, most program direction activity is decentralized to field
staff closer to actual situations. Other support functions are largely
performed in headquarters units.

Research focuses primarily on distilling data on past program operations to extract information meaningful to manpower policy development, program planning, and operations at all levels.

SPECIAL ANALYSES

131

Development activities devise and test innovative manpower methods,
including new forms of program linkages.
Evaluation activities seek to determine which programs work, to
what extent, and under what conditions. The effectiveness of individual
programs depends on the degree to which they meet the needs of the
people they enroll and the employers who hire them.
Program direction and support.—Federal efforts concentrate on
providing information and technical assistance to States and local
communities on methods to improve program performance, and on
overall monitoring for conformity of operations to program purposes.
Table 1-7. PROGRAM DIRECTION, RESEARCH AND SUPPORT
(in millions of dollars)
Outlays

Program
1971
actual

Research and development
Evaluation
Planning and technical assistance
Program direction

1972
actual

1973
actual

1974
estimate

3
1
6
27
87

30
7
3
4
10
0

22
7
3
7
15
1

117

Total

24
4
14
75

151

171

1975
estimate

181

2
3
8
3
7
10
1
150

Services provided.—Each major approach is usually combined
with various labor market services in different mixes. The average
costs of these major approaches are shown in the table below. Cost
increase for post-school work support reflects inclusion of public service employment.
Table 1-8. UNIT COSTS BY APPROACH, 1971 AND 1973
Man-year
unit cost
(dollars)
1971

On-the-job training
Institutional training
Vocational rehabilitation
Postschool work support
In-school work support._

__ _

2,017
2,237
1,181
3,627
1,587

1973

2,056
2,782
1,202
6,392
1,583

Average
duration of
enrollment
(years)
1971

1973

0.74 0.71
.41 .28
1.23 1.24
.57 .69
.28 .28

Participant
unit cost
(dollars)
1971

1973

1,484 1,450
909
797
1,454 1,485
2,065 4,439
441
437

IMPACT OF MANPOWER PROGRAMS

There are significant limitations to the impact that manpower
programs can exert on national economic conditions. The value of
program expansion as a response to economic changes is uncertain

132

THE

BUDGET FOR FISCAL YEAR

1975

since program impact on total employment conditions cannot be
adequately measured or controlled. For example, programs financing
transitional public service employment can result in substituting
Federal funding for jobs that would otherwise have been funded in
the regular economy. In other programs, services are oriented first
toward overcoming individual barriers to employment without regard
to affecting overall labor market conditions.
In addition, it is extremely difficult to precisely target program
effects on populations or industries affected by discrete economic
factors. However, limitations that operate at the national level are
not necessarily a factor restricting manpower programs planned and
operated at the local level. The goal of Comprehensive Manpower
Assistance is to enable more direct response to local needs.
People served.—Most Federal manpower programs focus on lowincome individuals and others with severe barriers to employment as
they are least likely to be able to improve their employment experience
without assistance. Changes in the mix of characteristics over time
frequently result from programmatic or statutory changes rather than
shifts within the general population served. For example, changes in
the proportion of males is largely reflective of increases in programs
serving AFDC recipients.
Table 1-9. CHARACTERISTICS OF CIVILIAN LABOR FORCE, ADULT POVERTY POPULATION AND MANPOWER PROGRAM PARTICIPANTS
Total U.S. labor
force (age 16-64)
civilian
noninstitutional

Poverty population
(age 14-64)
civilian
noninstitutional

Manpower program
participants
(age 14 1and
above)
1969

Average number (millions)
Percent:
Age 21 or less
Male
Less than high school education.
Poor
_ .
_
Welfare recipients
Minority 3
1
2
3

75.6 79.5 83.4
14
63
39
7
1
11

14
62
34
7
1 1
11

15
61
33
6
? )
11

10.9 11.1 12.7
19
39
69
100
30

23
39
68
100
(2)
30

31
39
66
100
(2)
33

1971

12 19
.
.

4
0
6
0
6
2
7
3
2
1
4
2

3
4
4
6
5
1
8
1
44
4
0

1973

22
.

3
1
44
4
4
7
2
4
5
3
5

Data excludes in-school programs.
Not available.
Data for labor force and poverty population does not include Spanish-speaking.

Enrollee characteristics.—The characteristics of enrollees served
by different approaches vary considerably. The effect of statutory
change can be seen within approaches. The 1973 increase in educational levels in post-school work support reflects the inclusion in this
approach of public service employment.

SPECIAL ANALYSES

133

Table 1-10. CHARACTERISTICS OF ENROLLEES BY APPROACH, 1969,
1971, 1973 (in percent)
21 or younger

Poor
1969

On-the-job training
Institutional training
Vocational rehabilitation
Post-school work support
In-school work support

51
81
70
95
100

1971

65
93
67
98
100

1973

63
93
61
96
100

Male
1969

On-the-job training
Institutional training
Vocational rehabilitation
Post-school work support
In-school work support

79
55
56
51
54

1969

47
43
24
65
100

1971

31
38
23
54
100

Less than high
school education

1973

29
30
25
41
100

Minority race

1969 1971

53
57
56
85
97

43
51
50
76
99

1973

40
42
48
52
95

Welfare recipients

1971

1973

1969

1971

1973

1969

76
29
57
58
53

73
21
58
60
55

45
57
22
53
58

36
51
21
52
56

37
40
22
43
63

9
34
11
38
31

1971 1973

11
74
13
36
32

23
80
18
26
33

Employment service placement.—Results of placement activities
of the Federal-State Employment Service System are highlighted in
the following table.
Table 1-11. INDIVIDUALS PLACED BY THE FEDERAL-STATE EMPLOYMENT SERVICE (in thousands)
1971 i 1972 i 1973

Nonagricultural jobs:
3 days or less
4to150days
150 days or more
1

Data for 1971 and 1972 includes estimates.

302

304

328

303
348
461
1,475 1,728 2,261

134

THE BUDGET FOR FISCAL YEAR 19 75

Program completions.—The following table highlights the percentage of individuals completing selected Manpower Programs and
obtaining jobs upon program termination. The OJT and Institutional
Programs shown have been superseded by Comprehensive Manpower
Assistance and experience under State and local programs may differ.
Table 1-12. COMPLETIONS AND INDIVIDUALS EMPLOYED AT TERMINATION FOR SELECTED PROGRAMS (in percent)
Completing
Program

1972

On-the-job training: Job opportunities in the business
sector (JOBS)
JOBS optional
Institutional: MDTA institutional
Rehabilitation: Federal-State vocational rehabilitation

44
6
3
7
2
7
5

Employed at
termination

1973

52
6
3
77
7
4

1972

4
4
6
3
7
3
7
5

1973

52
6
3
57
7
4

Impact on individuals.—The Federal-State Vocational Rehabilitation Program provides an example of the impact on individuals
possible by provision of manpower services.
Of the approximately 326,000 individuals rehabilitated by the
Federal-State Vocational Rehabilitation Program in 1972, 78% had
no earnings prior to referral to the program, while 83% had earned
incomes after completing rehabilitation. Mean earnings for all those
rehabilitated in 1972 rose from $14.67 per week at the time of referral
to $69.06 weekly at program completion. Although in absolute terms,
income at completion is still low, the relative change from preprogram
entry levels indicates the potential significance of providing manpower
services.
PROGRAMS BY AGENCY

The following table shows manpower obligations and outlays by
administering agency.

SPECIAL ANALYSES

135

Table 1-13. FEDERAL FUNDS FOR MANPOWER PROGRAMS
BY ADMINISTERING AGENCY (in millions of dollars)
Agency and Program

Obligations
1972
1973
actual actual

1974
est.

Office of Economic Opportunity:
0 E 0 manpower

26
13

370
74
648
6

458
83
685
6

537
90
744
6

1972 1973
actual actual

Department of Defense:
transition

Outlays
1975
cst.

1974 1975
est.
est.

407
32
599
6

436
89
636
6

483
95
715
6

Project

Department of Health, Education
and Welfare:
Social services
WIN support services
Vocational rehabilitation
High school work study
Subtotal, HEW
Department of Housing and Urban
Development: HUD manpower. _

593
97
770

1,098 1,233 1,377 1,514 1,044 1,167 1,300 1,460
55

Department of Justice: Prisoner
training
Department of the Interior: Indian
programs

659
90
765

63
5

7
5

50
6

5
37

5
38

5
37

Department of Labor:
Comprehensive manpower assistance
__. 1,618 1,357 1,889 2,008 1,592 1,388 1,440 1,955
Emergency employment assistance
976 1,263
9
567 1,014
641
Work incentive training
184 209
250
190
139
192 215 220
Food stamp work requirement. __
8
14
17
19
8
14
17
19
Employment service
389 423 424 424
371
431
424 424
Labor market information
38
38
43
43
35
37
39
42
Antidiscrimination
4
4
5
6
4
4
5
6
Program administration
132
125
124
124
130
140
123 126
Subtotal. Labor
Veterans Administration:
On-the-job training for veterans..
Veterans vocational rehabilitation
Veterans assistance centers
Subtotal, VA
Action: Older worker

3,348 3,432 2,758 2,812 2,845 3,219 2,903
124

199

245

88
3

211

291

~ ~ 2 3 ~Y\

241

88
337

124

94
4

199

245

241

88
4

94
4

337

339

H ~~2]

84
4

339

~~27 ~~30

2,790

3
211

4
292

Equal Employment Opportunity
Commission: Antidiscrimination._

Other Federal agencies:
Disadvantaged youth programs __
Federal contract compliance

78
20

65
28

66
32

77
18

61
24

62
30

62
32

Total

4,941 5,252 4,703 4,892 4,363 4,952 4,808 4,831

SPECIAL ANALYSIS J
FEDERAL HEALTH PROGRAMS *

Overview.—Federal health programs will account for $35.5 billion in
outlays in 1975. This is an increase of $3.7 billion (11%) over 1974.
It illustrates the upward trend of Federal health outlays as a component of the total Federal budget. The following table shows this
trend in Federal health expenditures:
Table J-1. FEDERAL OUTLAYS FOR HEALTH COMPARED TO THE TOTAL
FEDERAL BUDGET (dollars in billions)
Actual
1965

Total Federal outlays
Federal health outlays
Health as percent of total outlays

$118.4
$5.2
4.4

1969

1971

$184.5 $211.4
$16.6
$20.2
8.9
9.5

Estimated
1972

$231.9
$24.5
10.6

1973

1974

$246.5
$26.0
10.6

1975

$274.7
$31.9
11.6

$304.4
$35.5
11.7

Table J-2 summarizes and distributes Federal health outlays by
major category for 1973 through 1975. Expenditures for financing or
providing health services will account for almost 91% of the total $3.7
billion increase over 1974, whereas 9% of the increase goes to health
resource development and the remainder to prevention and control of
health problems.
1
Included in this analysis are outlays from many agencies and programs that fund health or
health-related activities. Part 4 of the Budget estimates 1975 expenditures for health at $26.3
billion; it excludes outlays of agencies and programs devoted to health, but classified under other
functions such as National Defense or Veterans Benefits and Services. The following table bridges
1975 health outlays from Part 4 to the total used here (in billions of dollars):
Outlays in Part 4
26.3
Plus health outlays assigned to other functions in:
Department of Defense
3. 1
Veterans Administration
3. 4
All other agencies
2. 7

Total health outlays in this analysis

136

35.5

137

SPECIAL ANALYSES

Table J-2. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
Outlays
1973
actual

Development of health resources, total
Health research
Training and education
Construction
Improving organization and delivery
Provision of hospital and medical services, total
Provision of direct Federal services
Provision of indirect Federal services
Prevention and control of health problems, total
Disease prevention and control
Environmental control
Consumer safety
Total, health programs

1974
estimate

(4,548)
(5,455)
2,005
2,398
1,218
1,390
868
1,031
457
636
(20,592) (25.349)
4,306
4,758
16,286
20,591
(890) (1,084)
463
543
109
152
318
389
26,030

31,888

1975
estimate

(5,784)
2,587
1,332
1,170
695
(28,655)
5,009
23,646
(1,101)
508
190
403
35,540

In 1973, Federal health outlays accounted for 25% of total national
expenditures for health care compared to 9% in 1965 prior to enactment of Medicare and Medicaid. As shown in figure J-3, Federal,
State, and local government funds are a substantially more important
source of financing for institutional health services than for physicians'
services and other health care expenditures.
Sources of Expenditures for Health Care

J-3

$36.2 Billion
SI 8 Billion

Fiscal Year 1973

State and
Local

.6%

Publ

Nursing Home Care

Other Services and Supplies

138

THE BUDGET FOR FTSCAL YEAR

19 7 5

Funds for Personal Health Services by Age Group
Fiscal Year I f 72

J-4

$40 7 Mi0ll

Public

Under 19 Year,

65 Year* dad Ovet

Figure J-3 indicates the sources—Federal, State and local, and
private—of funds for health care. The major components of "Other
Services and Supplies" shown on the figure are dental care, drugs, and
the costs of administering health insurance plans.
Table J-5. SELECTED INDICATORS OF HEALTH STATUS (annual rates)
1950

Birth rate (per 1,000 population)
Death rate (per 1,000 population)
Average life expectancy at birth in years
Infant mortality rate (deaths under 1 year of age per 1,000 live
births)
Leading causes of death (per 100,000 population):
Diseases of the heart
Cancer
.
Cerebrovascular disease
Accidents
_
Certain diseases of early infancy
Influenza and pneumonia.,
__
Tuberculosis, all forms
General arteriosclerosis
Kidney diseases
Diabetes
Cirrhosis of liver

1960

1970

23.6
9.6
68.2

23.7

18.2

9.5

9.4

69.7

70.8

29.2

26.0

19.8

355.5
139.8
104.0
60.6
40.5
31.3
22.5
20.4
16.4
16.2
9.2

369.0
149.2
108.0
52.3
37.4
37.3

360.3
162.0
101.7
54.2
120.9
130.5

6.1
20.0

2.6

i 15.9

6.7

3.7

16.7
11.3

18.5
15.8

1
Some changes in death rates are primarily because of changes in coding and do not necessarily
reflect changes in actual death rates.

SPECIAL ANALYSES

139

Federal health programs, as shown in table J-2, can be grouped
into three basic categories—programs designed to develop health
resources, programs to provide health and medical services (both
indirectly through financing, and directly), and programs aimed at the
prevention and control of health problems. Included in these three
categories are special impact programs that address particular national
problems. This special analysis addresses each of these three categories
followed by a section on special impact programs.
HEALTH RESOURCES

Federal programs for the development of health resources include
support for health research, health manpower training and education,
construction of medical and health facilities, and efforts directed toward improving the organization and delivery of health services. The
combined outlays for these programs, as shown in table J-6, will be
$5,784 million in 1975, an increase of $329 million over 1974.
Table J-6. FEDERAL OUTLAYS FOR DEVELOPMENT OF HEALTH
RESOURCES (in millions of dollars)
Outlays
1973
actual

Health research
Training and education
Construction
Improving organization and delivery
Total

1974
estimate

1975
estimate

2,005
1,218
868
457

2,398
1,390
1,031
636

2,587
1,332
1,170
695

4,548

5,455

5,784

Health research.—Biomedical research attempts to provide new
knowledge, through the support of basic and applied research, that
can be used in the diagnosis, treatment, prevention, and control of
disease.
The largest Federal biomedical research agency is the National
Institutes of Health (NIH) within the Department of Health, Education, and Welfare (HEW), NIH administers 67% of Federal health
research funds.

140

THE

BUDGET FOR FISCAL YEAR

1975

Funds for Medical Research and Development
$ Billions

$ Billions

-4
O t H e f Support (Other Private Support
and Stan und Local Government)

industry Support
Federal Support*

2 -

2.23

-1

.8
2
1953

1958

1963

1968

1973

Fiscal Years

Covers obligations For medical and health-related research and development excluding training or construction

Table J-8. FEDERAL OUTLAYS FOR HEALTH RESEARCH
(in millions of dollars)
Outlays
1973
actual

Cancer
Cardiovascular
Mental health
Neurological and visual
Population and family planning
Environmental health
Aging......
Metabolic diseases
Child health
Infectious diseases
Pulmonary
Dental
Other research and development
Total

1974
estimate

1975
estimate

353
329
102
137
46
208
31
144
68
152
31
37
365

456
389
10
4
11
6
57
249
36
19
6
74
172
47
43
406

459
432
134
16
8
60
305
37
15
8
83
19
6
56
4
1
438

2,005

2,398

2,587

In addition to HEW, other Federal agencies support and conduct
research in support of program missions. The three largest of these
other biomedical research programs are the Department of Defense,
Atomic Energy Commission, and the Veterans Administration. To

141

SPECIAL ANALYSES

gether, these agencies are responsible for 13% of all Federal biomedical
research expenditures.
Training and education.—Since 1963, the number of U.S. medical
and osteopathic schools has grown from 92 to 119; total enrollment
has increased 52%, from 33,072 to 50,125; and graduates have increased 45%, from 7,631 to 11,038. The pool of foreign-trained
physicians—including many U.S. citizens—has doubled to approximately 65,400, or 20% of all active physicians. The Nation's supply of
active physicians (M.D.'s and D.O.'s) grew from about 252,000 in
1960 to 323,000 in 1971, an increase of 28% over an 11-year period.
Similarly, the number of active registered nurses grew from 582,000
in 1963 to 777,000 in 1972, a one-third increase.
J-9

Active Physicians, Domestic and Foreign Trained

Thousands Active M.D.'s and D.O.'s
600

Thousands Active M.D.'s and D.O.'s
600
ft^^j foreign Trained Physicians
(including Canadian graduates)

500-

1 U.S. Trained Physicians

496

- 500

400

300-

-300

272
75.8%
70.7%
76.3%

20084.8%

- 200

81.4%

88.4%

- 100

100

1963
Calender Yeats

1967

1970

1975

1980

1985
Projected

Without major alterations in either present output from domestic
schools or immigration patterns, the physician supply is projected to
increase to between 435,000 and 446,000 by 1980, an increase of
35-38% over the 1971 level. This increase would be 33^ times the
expected rate of increase in the size of the U.S. population during the
same period. Accordingly, the overall national ratio of physicians per
100,000 of the population would increase from 156 in 1971 to 192 in
1980.

142

THE BUDGET FOR FISCAL YEAR 19 75

Geographic Distribution of U.S. Physicians—1963 and 1971
M.D.'s per 100,000 Population
200
New

J-10

M.D.'s per 100,000 Population
-200

England
13.3%; 'V, 12.5%.

- 160

160
12.6%;

120

80-

40-

Calendar Years

This increase in overall physician supply, however, has not significantly altered the imbalance in the geographic and medical specialty
distribution of physicians. The projected increase in supply could bring
about little change in this regard. Both United States and foreigntrained physicians have tended to locate disproportionately in more
populous, urbanized settings, especially in the Middle Atlantic and
East North Central States. Figure J-10 illustrates how little the geographic distribution—shown in thousands of physicians per major
census area—changed from 1963 to 1971.

143

SPECIAL ANALYSES
Change in U.S. Physician Specialties— 1963 to 1971

23.1%

Total Active M.D.'s

14.8%

J-ll

General
Practice

Medical Specialties

34.5%

Surgical Specialties

A l l Other Specialties

28.0%

Table J—12- FEDERALLY AIDED HEALTH TRAINING AND
(in millions of dollars)

EDUCATION

Outlays

1973
actual

Degree or certificate training
Research personnel
Physicians
Dentists
Nurses
Mental health professionals.Other health professionals
Paramedical personnel
All other training
Total

_ _

1974 1975
estimate

estimate

(929) (1,093) (1,058)
109
130 123
370
458 465
68
82
80
129
127
92
42
40
44
114
129 121
97
127 133
289
296 275
1,218

1,389

1,332

144

THE BUDGET FOR FISCAL YEAR 19 75

Since 1963 there has been a 15% decline in the number of physicians
in general practice. At the same time there has been a marked increase
in the proportion of physicians engaged in specialty practice (see figure J - l l ) . These changes in the specialty composition of medical
practice have caused a growing concern over the availability of primary medical care, although the functions of general practice have
partially shifted to specialists in internal medicine, obstetrics and
gynecology, and pediatrics. The category of "other special ties" includes, for example, physicians in psychiatry, radiology, pathology,
public health, and anesthesiology.
Approximately 45-50% of the revenues to the Nation's medical
schools continue to be derived from Federal grants or contracts. Table
J-13 shows the Federal funds to medical schools from selected agencies. These outlays do not include payments for medical services from
Medicare and Medicaid.
Table J-13. FEDERAL FUNDS TO MEDICAL SCHOOLS
(in millions of dollars)
Outlays

Agency
1973
actual

Department of Health, Education, and Welfare
Research and development
Education and training
Construction
Hospital and medical services
Other
Department of Defense
Education and training
Veterans Administration
Education and training
National Aeronautics and Space Administration
Research and development
Special Action Office for Drug Abuse Prevention
Research and development
Total
Research and development
Education and training
Construction
Hospital and medical services
Other

(933)
546
224
152
10
1
(5)
5

1974
estimate

1975
estimate

(1,086)
715
262
94
14
1
(15)
15
(5)
5
(4)
4
(3)
3

(1,096)
743
238
100
13
1
(15)
15
(10)
10
(3)
3
(4)
4

941

1,113

1,127

549
229
152
10
1

722
282
94
14
1

750
263
100
13
1

(3)
3

The principal programs of direct support for health manpower
schools—administered by the Health Resources Administration in
HEW—include:
• basic operational support grants tied to enrollment levels.
• special projects to stimulate, test, and demonstrate educational
reforms and innovations in all the health disciplines.
• special educational initiatives in such areas as improving access
to health professions education for the socially and economically
disadvantaged, developing new types of health manpower,
stimulating the practice of family medicine, and bringing medical
education into closer contact with health care delivery needs
in medical scarcity areas.

SPECIAL ANALYSES

145

A program of national health service scholarships—funded at a
level of $22.5 million—will pay all tuition, fees, and other educational costs, as well as provide generous stipends in return for periods
of service to meet public needs, including Federal service, for approximately 2,000 students. This program is directed toward meeting both
the financial needs of many deserving students, and the Federal
Government's requirements for health manpower to discharge its
essential health care responsibilities.
Table J—14. HOSPITAL AND HEALTH FACILITY CONSTRUCTION
(in millions of dollars)
Outlays

1973

Federally supported construction:
Hospitals new
Hospitals, modernized and replaced
Long-term care facilities
Research facilities
Environmental health facilities
Ambulatory care facilities
Health professions educational facilities.
Other facilities

1974

1975

actual

estimate

48
75
23
39
16
6
62
202
46

46
79
27
60
16
7
68
21
1
44

59
95
27
65
11
8
70
170
46

Total, federally supported

61
6

71
1

713

Federal hospitals and health facilities:
Hospitals, new
Hospitals, modernized and replaced
Long-term care facilities
Research facilities
Environmental health facilities
Ambulatory care facilities
Other facilities

6
11
5
2
1
1
27
9
2

25
210
6
1
9
45
17
6

20
302
8
26
50
32
1
9

Total, Federal

207

319

457

Total, construction

868

1,030

1,170

Construction of health care facilities.—Federal programs for
the construction of health care facilities include the support of both
community health care facilities to serve the general public, and
facilities operated by Federal agencies for special beneficiary groups.
In 1975, Federal outlays for the construction of health care facilities,
including environmental health facilities, are estimated at $1,170
million.
The Nation currently is experiencing a general oversupply of
hospital beds. The national average occupancy rate in community
hospitals is down to about 73%. This can be attributed to changes in
treatment practices and an emphasis on ambulatory care, as well as to
over-building in certain areas.
The primary Federal program supporting the construction of community health care facilities is the Hill-Burton construction grant
program. The Hill-Burton program's expenditures—as a percentage of
total national expenditures for construction of health care facilities—
have declined over the past decade. In 1972, Hill-Burton expenditures
represented only about 5% of the total national medical facility construction expenditures, compared to 13% in 1963.
- 74 - 10
540-700 O

146

THE BUDGET FOR FISCAL YEAR 1975

Hill-Burton Expenditures Relative to Total Medical Facility Construction j-is
$ Millions
-$5,000

$ Millions
$5,000Non Hill-Burton
4,120

Hill-Burton
$4,000

-$4,000

$3,000

$2,000

-$2,000
1,382

$1,000

1962

1963

1964

1965

1966

1967

1968

1969

1970

(971

1972

Calender Years

Other Federal agencies also assist in the construction of community
health facilities. The Department of Housing and Urban Development,
for example, provides mortgage insurance for construction of hospitals,
nursing homes, and group practice facilities. The number of beds in
institutions covered b}^ newly written mortgage insurance is estimated
to increase from 8,100 in 1974 to 9,600 in 1975.
Organization and delivery of health services.—The principal
efforts to improve the organization and delivery of health services
include health services research, health planning support at the State
and local level, and limited demonstration activities. Outlays for these
purposes are estimated at $695 million in 1975.
The primary Federal health care delivery demonstration activities
include:
• grants and contracts to assist States and localities in developing
comprehensive emergency medical services (EMS) systems
• grants, loans, and contracts to plan, develop, and provide initial
operating support for health maintenance organizations (HMO's)
that deliver comprehensive medical care on a prepaid basis
• the National Health Service Corps, which will locate approximately 405 health professionals in underserved areas to demonstrate the ability of communities to support health personnel.

SPECIAL ANALYSES

147

The funding for health maintenance organizations and emergency
medical services are included in the following section, since services
are also financed from these activities.
FINANCING AND PROVIDING HOSPITAL AND MEDICAL SERVICES

Programs to finance or provide hospital and medical services include
Medicare and Medicaid, which account for 72% of outlays for these
purposes, as well as directly administered programs for health services
provided by the Department of Defense, the Veterans Administration,
and HEW. Table J-16 shows Federal expenditures for financing and
providing hospital and medical services.
Table J-16. FEDERAL FINANCING AND PROVISION OF HEALTH SERVICES
(dollars in millions)
Outlays
1973
actual

Patients treated (thousands)

1974
estimate

1975
estimate

Financing of indirect hospital and
medical services:
General hospital inpatients
Psychiatric hospital inpatients
Long-term care inpatients
Outpatient mental health services. _
Outpatient services
Other services

10, 333
221
1,966
238
2,761
766

12,913

16,286

20,591

Provision of direct Federal hospital
and medical services:
General hospital inpatients
Psychiatric hospital inpatients
Long-term care inpatients
Outpatient mental health services __
Outpatient services
Other services

$2,577
451
122
31
1,043
81

$2,8 4 $2,958
5
44
8
55
0

1975

30
6

Total, financing of indirect
services

1974

14,777

25
9

1973

Total, provision
services

2,524

26
8
3,475
1,098

10
3

3
5
1 163
,
93

10, 1 2 11,593 11,9 7
5
7
15
1
15
2
12
2
2,917
1 3 9 1,575
,2
16 9
,0
3 7 1 7 2 2,080 2, 1 8
8
,0
6
3,943 1
1
2
48, 1 8 54,650 57, 1 0
1,262

23,646

2,062

2,068

13
8

15
8

32
1,137
1,264 1 66,170
101 |
1

3
1
1,262
67,139

18
3

4
3

2,092
19
8
30
1,399
68,314

direct

Total, financing and provision
of services

4,306

4,758

5,009

20,592

25,349

28,655

Medicare.—Medicare is the Federal Government's largest health
activity and will account for 40% of Federal health outlays in 1975. It
includes—for the aged, disabled, and those suffering from kidney disease—both hospital insurance (HI), which pays for inpatient care and
subsequent skilled nursing home and home health benefits, and supplementary medical insurance (SMI), which pays for physicians' and
other outpatient services.
HI is financed largely through social security taxes on earnings, while
SMI is financed by premiums from enrollees (currently $6.30 per
month) and matching contributions from general tax revenues. Both
insurance components are administered primarily through private

148

THE BUDGET FOR FISCAL YEAR 19 75

insurance companies under contract with the Social Security Administration. An estimated 21.6 million aged persons, comprising over 95%
of the Nation's aged population, will be enrolled in Medicare in 1975.
In addition 1.9 million social security recipients under age 65 who are
eligible for social security disability benefits and all persons covered
by social security and their families who require treatment for chronic
kidney disease will also be eligible for Medicare insurance.
The following table displays basic data concerning the Medicare
program coverage, benefits, and administration.
Table J 1 . MEDICARE COVERAGE, BENEFITS, AND ADMINISTRATION
—7
(in millions of dollars)
1973
actual

1975
estimate

20.9
4.7
$6,648
$6,408
$188
$52
$194
9.2

23.0
5.4
$8,465
$8,138
$251
$76
$308
10.8

23.5
5.6
$9,831
$9,465
$286
$80
$332
11.6

20.4
10.5
$2,391
$2,165
$188
$28
$10
$246
69. 3

Hospital insurance (HI):
Persons with protection (millions)
Beneficiaries receiving services (millions)
Benefit payments:
Inpatient hospital services
Skilled nursing facility services.
Home health services
Administrative expenses
Claims received (millions)
Supplementary medical insurance (SMI):
Persons with protection (millions)
Beneficiaries receiving services (millions)
Benefit payments
Physicians' services
Outpatient services
Home health services
Other medical and health services
Administrative expenses
Claims received (millions)

1974
estimate

22.5
11.6
$2,966
$2,595
$289
$40
$42
$441
84.9

23.0
12.2
$3,586
$3,081
$387

$47

$71
$442
92.9

Medicare reimbursements per enrollee differ substantially in various
regions of the country. These differences reflect variations in resource
availability, utilization practices, and service costs. Table J—18 summarizes information on these patterns for 1969.
Table J—18. MEDICARE UTILIZATION AND REIMBURSEMENT BY
GEOGRAPHIC REGION (1969)
Northeast

Hospital insurance (HI):
Hospital admissions per 1,000 enrollees
Average length of hospital stay (days)
With surgery
Without surgery
Covered hospital days per 1,000 enrollees
HI reimbursement per enrollee
Supplementary medical insurance (SMI):
SMI enrollees meeting deductible
SMI reimbursement per enrollee

North
Central

South

West

256
15.1
16.0
14.5
3,828
$259

317
13.6
15.0
13.0
4,341
$235

341
11.9
13.5
11.3
4,014
$192

317
10.6
11.4
10.3
3,343
$261

48.4%
$96

44.8%
$71

48.2%
$79

57.8%
$117

SPECIAL ANALYSES

149

Medicaid.—Medicaid is a State program that provides medical
services to individuals receiving public assistance. States may also
choose to provide medical services to the medically needy, e.g., those
persons with income slightly above the public assistance level who are
unable to pay all medical expenses. Federal matching assistance ranges
from 50% to 83% of the costs of providing these benefits, depending
upon States' per capita incomes. The States determine the level and
types of medical benefits.
In 1975, health care services under Medicaid will be provided to
approximately 28.6 million welfare recipients and other low-income
persons. The Federal outlays will be $6.5 billion. The following
table depicts Federal outlays and other selected program indicators,
based on State estimates.
Table J—19. MEDICAID COVERAGE, BENEFITS, AND ADMINISTRATION
1973
actual

Payments to medical vendors (millions)
Administrative costs (millions)
Recipients of service (millions)
Aged 65 or over
Blind and disabled
Children under 21
Adults in AFDC families
Average benefit payments per recipient
Aged 65 or over
Blind and disabled
Children under 21
Adults in AFDC families

$4,402
$198
23. 5
4. 0
2. 1
10.8
6. 6
$187
$385
$476
$90
$132

1974
estimate

1975
estimate

$5,505
$322
27.2

$6,148
$360
28.6

5.2
2.5

5.1
2.6

12.1

7.4

$202
$400
$470

$98

$143

12.9

7.9

$215
$467
$521

$99

$142

Approximately 67% of Federal Medicaid funds will finance inpatient and long-term care in 1975. The remaining dollars will finance outpatient services, as shown in table J-20.
Table J-20. ESTIMATED MEDICAID PAYMENTS, 1974
Outlays
(millions)

General and TB hospitals
Mental hospitals
Skilled nursing facilities
Intermediate care facilities
Physicians' services
Outpatient drugs
Dental care
Outpatient services (hospitals)
Outpatient clinic services
Medicare buy-in (SMI premium payments)
Laboratory and X-ray services
Other
Total

Percent

864
656
431
100
192
129
115
53
282

28
5
20
14
11
7
2
3
2
2
1
5

6,148

100

$1,745

336

1,245

150

THE BUDGET FOR FISCAL YEAR 19 75

Although the Medicaid matching formula provides higher
matching to low-income States, most of the program funds o o to
^
high-income States. This results from the fact that more affluent
States have proved more able to expand the population, and ssrvics^
covered. Five of the highest income States received over 50% of all
Federal Medicaid funds in 1973, and two States—New York and
California—received nearly 40% of these funds.
Other programs.—In addition to Medicaid and Medicare, the
Federal Government finances or provides medical services for certain
special categories of beneficiaries—such as Armed Forces personnel
and their dependents, veterans, and American Indians and Alaska
Natives. In addition, the Federal Government provides project grant
assistance to finance comprehensive health benefits for a limited
number of communities. These programs include:
• Federal formula and project grants.—Federal assistance is provided for the support of existing health projects—maternal and
child health, comprehensive health centers, neighborhood and
family health centers, family planning services, community mental
health centers, and specialized treatment centers for alcohol and
drug abuse. Outlays for these health service projects will amount
to $1,178 million in 1975.
• Indian health services.—Outlays for Indian health services and
facilities will increase in 1975 to $284 million, a $32 million
increase over 1974. These funds provide comprehensive health
care, with an emphasis on ambulatory care as well as construction
of sanitation facilities, hospitals, and clinics.
Table J—21. SELECTED INDICATORS OF INDIAN HEALTH STATUS
(annual rates)
1950

Birth rate (per 1,000 population)
Death rate (per 1,000 population)
Average life expectancy at birth (years)
Infant mortality rate (deaths under 1 year of age per 1,000 live
births)
Leading causes of death (per 100,000 population):
Heart
Accidents
Influenza and pneumonia
Certain diseases of early infancy
Cancer
Cirrhosis of liver

1960

1970

36.2
12.9
60.0

42.7
9.1
61.7

32.6
7.7
64.0

! 85.8

50.3

23.8

148.8
125.9
108.0
77. 3
60. 3
7.7

135.5
155.2
95.0
66.7
65.2
20.7

142.0
157.1
38.6
29.6
62.6
45.5

» Less Alaska.

• Medical care to active and retired military personnel and their
dependents.—In 1975, DOD will operate over 200 hospitals and
other health facilities directly and will contract with community
facilities to provide additional care for its beneficiaries. Outlays
for these services will be $3,060 million in 1975, $116 million more
than in 1974.

SPECIAL ANALYSES

151

• Medical care to veterans.—VA will operate 170 hospitals, 87 longterm care facilities, and 218 outpatient clinics, and will also provide contract care for certain veterans at an estimated cost of $3.1
billion in 1975, an increase of $232 million over the 1974 level.
Outpatient visits in 1975 are expected to rise to 14 million, with
an mcrease in the number of patients receiving hospital treatment
to 1,090 thousand from 1,043 thousand in 1974.
• Health insurance for Federal employees.—Health benefits are provided to almost 2.4 million Federal civilian employees and
annuitants and their dependents under the Federal employees
health benefits programs managed by the Civil Service Commission. In 1975, Federal payments to finance these programs will
increase by $70 million to $609 million.
Distribution of health care outlays by age groups and economic status.—Table J-22 distributes Federal outlays for the
financing and direct provision of hospital and medical services among
three major age groups and between indigent and nonindigent persons.
Outlays for the development of health resources and for prevention
and control of health problems are excluded from the table, since they
are not normally distributed by population group or income.
Table J-22. ESTIMATED FEDERAL HEALTH CARE OUTLAYS BY
POPULATION AND INCOME GROUPS (in millions of dollars)
Outlays
1973
actual

Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Indigent persons, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Nonindigent persons, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)

1975
estimate

20,592

Total, all recipients

1974
estimate

25,349

28,656

11,738
6,770
2,084

13,388
9,536
2,425

15,114
10,945
2,597

6,907

8,494

9,542

2,358
3,356
1,193

2,802
4,226
1,466

3,172
4,783
1,586

13,685

16,855

19,115

10,586
5,310
959

11,943
6,162
1,011

9,380
3,414
891

PREVENTION AND CONTROL OF HEALTH PROBLEMS

Consumer safety, communicable disease control, traffic accident
reduction, occupational safety, environmental health, and foreign
health assistance are some of the areas in which the Federal Government supports programs to prevent and control health problems.
Outlays for these activities will increase by 2% over 1974 to $1,101
million in 1975. Table J-23 shows Federal outlays for the prevention
and control of health problems.

152

THE BUDGET FOR FISCAL YEAR 19 75

Table J-23. FEDERAL OUTLAYS FOR THE PREVENTION AND CONTROL
OF HEALTH PROBLEMS (in millions of dollars)
1973
actual

Disease prevention and control
Environmental control
Consumer safety
Total, prevention and control

43
6
19
0
38
1
890

1974
estimate

53
4
12
5
39
8
1,084

1975
estimate

58
0
10
9
43
0
1,101

Disease prevention and control.—Disease control includes those
activities supported by a variety of Federal agencies directed toward
the prevention of diseases and injuries through research, regulatory
activities, provision of preventive services, and public education.
The Center for Disease Control (CDC) in HEW will continue to
focus its efforts on the control of venereal disease and other communicable diseases through assistance to States and localities in the
form of grants, technical assistance, personnel, and public education.
Environmental control.—Demonstration environmental health
programs to control childhood lead-based paint poisoning and rats
in selected urban communities will continue within HEW, although
the major environmental effort will be in the Environmental Protection Agency (EPA). EPA maintains a surveillance of the effects
of environmental pollution on the health of the American people,
promulgates environmental standards, and monitors compliance.
Consumer safety.—In 1975, Federal efforts to protect the public
from impure foods, unsafe and ineffective drugs, and hazardous consumer products will continue to grow with an increase of $14 million
in outlays over 1974.
The Food and Drug Administration (FDA) in HEW will continue to
play a major role in improving the quality and safety of the Nation's
food supply and the safety and effectiveness of drugs for their intended
uses. In 1975, FDA's Bureau of Biologies will continue to review the
efficacy of biologicals and vaccines and will continue to conduct
comprehensive inspections of intrastate blood banks.
In addition, proposed legislation will authorize FDA to set and enforce standards to insure the safety and effectiveness of medical devices. Other proposed legislation would require coding of all drugs to
aid in their rapid identification and would require full-ingredient statements on all food labels. FDA and the Environmental Protection
Agency will continue the development of the National Center for
Toxicological Research to perform long-term studies of the effects of
low concentrations of chemicals in the environment and foods.
The Consumer Product Safety Commission will increase investigations, research, and the collection and dissemination of information in
order to protect the consumer from hazardous products and to inform
the public about the safe use of products that are potentially hazardous if improperly handled.

SPECIAL ANALYSES

153

Accidents and occupational safety.—In 1972 there were 117,000
deaths resulting from accidents—the leading cause of death for
persons between the ages 1 and 44. In addition, 11.5 million people
were disabled as a result of accidents.
The number of motor vehicle fatalities was 56,600 in 1972, an increase of 1,900 over 1971. In 1975 emphasis will be placed on State
passage of mandatory seatbelt use laws and highway safety construction spot improvements. Federal obligations for prevention of
traffic accidents are estimated to be $470 million in 1975, an increase
of 50% over 1974.
To combat hazards encountered in the work place, increased emphasis in HEW will be placed on developing criteria for occupational
safety and health standards to be used by the Department of Labor.
Foreign health assistance.—In 1975, the United States will
provide $225 million for disease prevention and control assistance
to other nations. These funds will support efforts by the Agency for
International Development (AID), the Peace Corps, and international agencies to which the United States contributes financially,
such as the World Health Organization and the Pan American Health
Organization.
SPECIAL IMPACT PROGRAMS

Special impact programs are Federal programs targeted at health
problems that are sufficiently unique to warrant special attention.
These programs include drug abuse activities, the provision of family
planning services, and venereal disease prevention activities.
Drug abuse.—Treatment capacity now exists for every addict
who seeks treatment. Federal drug abuse programs will be coordinated
by the Special Action Office for Drug Abuse Prevention until the end of
1975.
HEW funds major drug abuse treatment, rehabilitation, prevention, and research programs through the National Institute on
Drug Abuse. Defense and VA will continue efforts to control the drug
problem among military personnel and veterans.
Within the Department of Justice, the Bureau of Prisons administers
treatment programs for Federal prisoners, the Drug Enforcement
-Administration conducts training and research programs, and the
Law Enforcement Assistance Administration supports a broad range
of programs related to drug abuse.
Outlays for all drug abuse prevention activities rose from $365
million in 1973 to $445 million in 1974. This effort will continue in
1975 with outlays of $460 million. These outlays are in addition to
law enforcement activities which are discussed in Special Analysis
M and amount to $293 million in 1975.
In sum, total outlays for all Federal drug abuse activities will grow
from $690 million in 1974 to $754 million in 1975.

154

THE BUDGET FOR FTSCAL YEAR 19 75

Table J-24. ESTIMATED OUTLAYS FOR DRUG ABUSE PREVENTION
PROGRAMS (in millions of dollars)
1973

Treatment and rehabilitation:
Special Action Office for Drug Abuse Prevention
Health, Education, and Welfare:
National Institute on Drug Abuse *
Social and Rehabilitation Service
Defense
Veterans Administration
Justice:
Bureau of Prisons
Law Enforcement Assistance Administration

Research, planning, and coordination:
Special Action Office for Drug Abuse Prevention
Health, Education, and Welfare:
National Institute on Drug Abuse 1
Office of Education
Social and Rehabilitation Service
Defense
Veterans
Justice:
Bureau of Prisons
Law Enforcement Assistance Administration
Drug Enforcement Administration
Subtotal

1
2

32.4

19.1

73.4
.9
46.0
23.0

123.6
.7
42.0
23.8

147.5
.4
42.0
24.4

3.1
.2

4.2

7.5

226.7

240.9

1.0

12.9
10.4
.5
14.1
.4

18.7
8.0
.2
11.3
.4

17.7
8.0
.1
10.2
.4

.7
1.1

.9
1.1

40.9

39.4

4.5

22.0

18.3

34.8
.7
.9
8.0
2.2

41.2

38.3

.4
11.6
1.3

.4
13.3
1.7

.3
.8

.3
.3
.8

.3
.4
.8

52.2

Subtotal

0.4

39.1

Education and training:
Special Action Office for Drug Abuse Prevention
Health, Education, and Welfare:
National Institute on Drug Abuse 1
Office of Education
Social and Rehabilitation Service
Defense
_______
Veterans Administration
Justice:
Law Enforcement Assistance Administration
Drug Enforcement Administration

Total

1975

147.0

Subtotal

Other drug abuse prevention funds

1974

77.9

73.5

126.4

99.7

106.4

364.7

445.2

460.2

Includes in 1973, the Office of Economic Opportunity (OEO) drug abuse programs.
Federal funds available for drug abuse activities through financing and bloc grant programs.

Family planning.—As table J-25 indicates, obligations for Federal
family planning activities are estimated at $283 million in the Health
Services Administration and the Social and Rehabilitation Service in
HEW. Efforts will be concentrated on providing services to lowincome persons.
Family planning research activities are supported by NIH and AID.
Obligations for this research will increase to $53 million in 1975.

SPECIAL ANALYSES

155

Table J-25. FAMILY PLANNING SERVICES AND RESEARCH
(dollars in millions)
Obligations
1973
actual

Research, total

1974
estimate

1975
estimate

$48

$49

$53

$42
$6

$42
$7

$45
$8

Services, total
Department of Health, Education, and Welfare:
Health Services Administration
Social and Rehabilitation Service

$188

$212

$231

$136
$52

$137
$75

$137
$94

Family planning programs, total

$236

$261

$284

5,008,000 6,225,000

7,058,000

Department of Health, Education, and Welfare
Department of State: Agency for International Development.

Number of people served, total

Venereal disease.—Since the early 1960's, the incidence of gonorrhea has been increasing steadily throughout the United States, and
the rate of syphilis has been edging upward since 1970. In 1972, the
Federal Government launched a concerted effort to control both of
these diseases by substantially increasing assistance to States and
localities. By the end of 1973, the rate of increase in syphilis had been
reduced by two-thirds and the number of reported cases of male
gonorrhea, the best measure of true incidence, had actually begun to
decline. In 1975, Federal obligations for research on venereal disease
are estimated to be $3.5 million, while obligations for diagnosis,
casefinding, and treatment activities are estimated to be more than
$31 million.
Table J-26. VENEREAL DISEASE TRENDS
Primary and
secondary syphilis
Cases
reported

1941
1950
1957
1965
1969
1970
1971
1972
1973

68,231
32,148
6,251
23,250
18,679
20,186
23,336
24,000
25,080

Rates/
100,000
51.7
21.6

3.8
12.3

9.3
10.0
11.5
11.7
12.1

Gonorrhea
Cases

193,468
303,992
216,476
310,155
494,227
573,200
624,371
718,401
809,681

Rates

146.7
204.0
129.8
163.8
245.9
285.2
307.5
349.7
392.2

156

THE BUDGET FOR FISCAL YEAR 1975
EXPENDITURES FOR H E A L T H ACTIVITIES BY AGENCY

The following tables distribute the health-related outlays of Federal
agencies by the categories used in this analysis. Except for HEW, the
Consumer Product Safety Commission, and parts of the Civil Service
Commission and the Department of Housing and Urban Development, health-related outlays of all other agencies are, because of
their major purpose, assigned to functions other than health (650)
in part 4 of the budget document. The tables, therefore, indicate the
predominant budget functional code for each agency. Other special
analyses such as those on research and development, education, and
manpower also include all Federal outlays in their areas. They will
thus include, where pertinent, the same outlays that are tabulated in
this analysis.

Table J-27. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1973 (in millions of dollars)
Functional
code

Department of Health, Education, and Welfare (total)
Health Services Administration
Health Resources Administration
Alcoholism, Drug Abuse, and Mental Health Administration
Center for Disease Control
National Institutes of Health
Food and Drug Administration
Social Security Administration
Social and Rehabilitation Service
Other HEW
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
Agency for International Development
National Aeronautics and Space Administration
Atomic Energy Commission
Civil Service Commission
Department of Labor
Department of State
National Science Foundation
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1973
•Less than $500,000.

650
650
650
650
650
650
650
650
650/700
051
804
551
350
404
152
250
058
906
607/609
150
606

Health
research

(1,517)
2
2
113
34
1,325
23
15
3
117
74
48
16
5
26
104
*

Training
and
education

Construetion

(745)
33
418
113
1 _.
139
2
10
29
131
146

(492)
28
383
22
___
27

(244)
15
188
5

16
16
76
98
170
2

2
9
*
17
68

14
11
*
156
6

Organization and
delivery

*
1

26
72

*
*
29

2,005

1,218

868

Direct
Federal
hospital
and
medical

(201)
163

Indirect
Federal
hospital
and
medical

(15,064)
490

262

*
3
1,847
2,231

9,479
4,807
26
478
145

99
1
*
4
11
1
12

138
*

14
446

457

4,306

16,286

Prevention and
control
of health
problems

Total

(501) (18,764)
143
874
20
1,011
56
606
101
136
*
1,516
118
143
9,479
41
4,891
22
108
12
2,661
2,711
233
214
264
3
33
115
27
46
151
138
28
188
23
41
27
63
226
446
890

26,030

Table J-28. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1974 (in millions of dollars)
Functional
code

650
650
650
650
650
650
650
650
650/700
051
804
551
350
404
152
250
058
906
607/609
150
606

Training
and
education

Health
research

(1,839)
2
2
132
37
1,616
33

(806)
44
450
106
*
167
1

14
3
120
82

7
31
216
168

Construetion

(574)
56
411
27

(381)
17
303
8

58
„

52
18
7
37
113

16
6
115
126
181
2
*
5

__ __
1
44
85

158
6
5
5

2,398

1,390

Direct
Federal
hospital
and
medical

Indirect
Federal
hospital
and
medical

(229)
186

JPrevention and
control
of health
problems

13
13
*

Organization and
delivery

319

1
2
1,970
2,528

12,180
6,055
27
507
167

_
2
19
2
21
68

(19,211)
630

101
1

*
3
12

138
*

28
539

1,031

636

4,758

20,591

Total

(578) (23,618)
153
1,033
5
1,171
56
683
131
163
18
1,891
140
174
12,180
57
6,152
18
106
14
2,944
3,092
249
237
291
4
35
121
38
54
172
138
53
215
26
45
49
118
342
539
1,084

31,888

Table J-29. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1975 (in millions of dollars)
Functional
code

Department of Health, Education, and Welfare (total)
Health Services Administration
Health Resources Administration
Alcoholism, Drug Abuse, and Mental Health Administration
Center for Disease Control
National Institutes of Health
Food and Drug Administration
Social Security Administration
Social and Rehabilitation Service
Other HEW
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
Agency for International Development
National Aeronautics and Space Administration
Atomic Energy Commission
Civil Service Commission
_
Department of Labor
_._
Department of State
National Science Foundation
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1975
*Less than $500,000.

650
650
650
650
650
650
650
650
650/700
051
804
551
350
404
152
250
058
906
607/609
150
606

Health
research

(1,960)
2
2
133
32
1,738
38
10
5
119
89
54
25
11
49
130

Training
and
education

Construetion

Organization and
delivery

(756)
42
394
116

(588)
71
399
26

(438)
30
306
19

166
*

14
6
172
183
186
7

2
49
2
23
25

10
15

____
1

Prevention and
control
of health
problems

49
100

128
7
5
6

2,587

1,332

1,170

42
_ _

1
2
2,027
2,700

(22,090)
635
_.
450

14,191
6,731
33
519
218

122
*

*
6

(246)
201

Indirect
Federal
hospital
and
medical

6
32
206
199

Direct
Federal
hospital
and
medical

1
.

1
4
13
_ _
67

695

_
_
*

182

27
609

5,009

23,646

Total

(557) (26,635)
154
1,185
5
1,106
37
823
103
135
34
2,042
157
195
14,191
54
6,818
13
140
15
3,060
3,412
211
241
302
4
39
148
49
68
204
183
84
217
28
50
54
104
363
609
1,101

35,540

SPECIAL ANALYSIS K
FEDERAL INCOME SECURITY PROGRAMS

This analysis is a compilation of those Federal activities for which
a major objective is increasing the real income of identifiable individuals or groups, particularly (but not exclusively) those at the lower
end of the income scale. The programs included in this analysis are
divided into two broad categories:
—Cash benefits (including, for example, social security); and
—In-kind benefits (including, for example, food stamps).
OVERVIEW

Total Federal income security benefits—within the definitions used
in this analysis—are estimated to exceed $129 billion in 1975. This
represents an increase of almost $34 billion or about 35%, from the
1973 total of $96 billion.
The major items accounting for this change are:
—An increase of $15.6 billion in OASDI benefits, largely reflecting a
two step 11% benefit increase, fully effective in June 1974;
—An increase of $6.5 billion in health care benefits, mainlv due to
extension of Medicare coverage to the disabled and increased
costs of medical care;
—An increase of $4.1 billion in benefits for Federal employees,
divided between civilian and military retirement benefits;
—An increase of $2.8 billion in public assistance benefits, largely
due to the shift to full Federal funding of welfare for the aged,
blind, and disabled;
—An increase of $2.0 billion in food programs, reflecting a 22%
increase in the food stamp allotment and a major expansion in the
population eligible for stamps; and
—An increase of $1.7 million for unemployment insurance, reflecting
an increase in benefit levels and in the number of eligible workers.
160

SPECIAL ANALYSES

161

Table K-l. FEDERAL INCOME SECURITY BENEFITS
1973
actual

1974
estimate

1975
estimate

Federal outlays for cash benefits (millions):
Social security (OASDI)
Federal employee benefits
Veterans benefits
Public assistance
Unemployment insurance
Railroad retirement
Other programs
Proposed legislation included above

47,332
9,418
6,536
5,490
4,478
2,388
1,063

54,298 62,919
11,600 13,485
6,665
6,923
6,711
8,291
4,722
6,193
2,657
2,972
1,130
999
(13) (—328)

Subtotal, outlays, cash benefits

76,703

87,782 101,782

Federal outlays for in-kind benefits (millions):
Food and nutrition
Healthcare
Housing
Proposed legislation included above

3,842
13,802
1,602

4,932
17,366
1,877

5,768
20,048
2,245
(—55)

Subtotal, outlays, in-kind benefits

19,246

24,175

28,061

Total benefits

95,949

111,957 129,842

TARGET GROUPS

Federal income security programs maintain or supplement income
of persons and families whose capacity for self-support is reduced
by old age, disability, illness, unemployment, poverty, or death.
Where self-support is possible in part, or in the future, income
security programs provide temporary or supplementary support.
Where self-support is not possible, income security programs provide
basic income support.
The analysis below is organized by target group; that is, programs
are discussed as they affect people who share similar problems and
circumstances—the aged (annuitants and others), the unemployed,
mothers with small children and no breadwinner, and those lowincome persons who do not earn enough to provide for basic needs.
Needs-tested benefits are also indicated by target group.
Table K-2. INCOME SECURITY BENEFITS BY TARGET GROUPS
1973
ctual

Annuitants
Other aged
Disabled
Mothers and children
Temporarily unemployed
Other transitional low-income
Other
Total

0 - 7 4 - 1 1
540-700

1974
estimate

28,209
28,740
13,542
7,844
4,837
5,830
6,947

32,573
32,946
17,407
8,732
5,057
7,038
8,204

1975
Percent
estimate of total
1975

Change
1973-75

Percent
change
1973-75

38,135
38,172
20,370
9,625
6,530
7,899
9,111

29.4
29.4
15.7
7.4
5.0
6.1
7.0

9,926
9,432
6,828
1,781
1,693
2,069
2,164

35.1
32.8
50.4
22.7
35.0
35.5
31.2

95,949 111,957 129,842

100.0

33,893

35.3

162

THE BUDGET FOR FISCAL YEAR

1975

THE AGED

Income security benefits for the elderly consist of wage replacement
for heads of households severed from full-time gainful employment,
benefits to women who depended on their husband's incomes as the
main source of support, and assistance to those who were needy before
they became aged.
In-kind program benefits received by the aged provide medical care
through Medicare and Medicaid, and provide food and shelter on an
income-tested basis.
Table K-3. INCOME SECURITY BENEFITS FOR THE AGED
Benefit (millions)
1973
actual

Percent
increase
1973-75

1974
estimate

1975
estimate

37,123
2,135
3,323
679
179
1,114
1,440

42,560
2,351
4,409
759
194
1,473
1,427

49,150
2,646
5,383
828
210
2,434
1,573

32
24
62
22
17
118
9

45,993

53,173

62,223

9,039
1,539
378

9,826
2,058
461

11,134
2,399
551

23
56
46

Subtotal, in-kind benefit outlays

10,956

12, 346

14,084

Total

56,949

65,519

76,307

Covered employment:
Social Security (OASI) members
Railroad employees
Federal civilian employees
Uniformed services members
Coal miners'widows
Public assistance including refugees and Indians
Income-tested veterans pension
Subtotal, cash benefit outlays
Medicare
Medicaid
Otherin-kind

._.

Annuitants.—In all four federally run contributory retirement
systems, the benefit calculations are based upon the history of
earnings.
Under Old-Age and Survivors Insurance (OASI), 11.8 million
retired workers received pensions in 1973 related to the wages earned
under the system. Some 394,000 recipients in 1973 were primary beneficiaries under the railroad retirement system, but about 41% of these
retirees were also beneficiaries under the social security system. A total
of 631,000 persons were beneficiaries of the civil service retirement system and 2,000 of the foreign service retirement system, with little or
no overlap between these two Federal employee systems. Approximately 44% of the beneficiaries of the two Federal civilian employee
systems are also receiving social security.
The probable total number of primary beneficiaries of all the contributory retirement systems is thus 12.4 million persons in 1973 and
13.9 million in 1975.

SPECIAL ANALYSES

163

Table K-4. ANNUITIES TO PRIMARY BENEFICIARIES IN CONTRIBUTORY
RETIREMENT SYSTEMS: ANNUITY BENEFITS, BENEFICIARIES,
AND AVERAGE PAYMENTS BY SYSTEM
Benefit outlays
(millions)
1973
actual

1974
est.

1975
est.

Number of primary
beneficiaries (thousands)
1973
actual

1974
est.

1975
est.

Average monthly
payments
1973
actual

1974
est.

1975
est.

Old-age and survivors
insurance
23,926 27,145 31,598 11,768 12,399 13,240 174 179 203
Railroad
Retirement
Board
1,285 1,395 1,593
394
392
406 264 294 326
Civil Service Commission 2,973 4,002 4,907
631
720
764 393 463 534
Foreign Service retirement
25
31
37
2
3
3 921 947 985
Total

28,209 32,573 38,135

___. .._.

....

Other aged.—This category includes those programs or parts of
programs which benefit the aged but where the benefit outlay to a
specific individual is based upon criteria other than his or her own
wage record. The criteria of the program may be a work history of
some related person, and is not necessarily based on any measure of
need. Underlying all these program outlays is the presumption that
persons past a certain age (for example, 65) are generally not selfsupporting through their own current earnings.
Average monthly cash benefits in 1975 range from $56 for beneficiaries under the new Federal program of supplemental security
income, which has replaced the federally assisted State programs of
aid to the aged, to $520 for aged retirees from the uniformed services.
Aged widows.—Aged widows account for $12.9 billion in benefit
outlays in 1975—or 34% of all benefits to the aged outside of annuities to primary beneficiaries. The 38% increase in benefit outlays
to aged widows between 1973 and 1975 is due largely to the increase
in widows benefits to 100% of her deceased husband's primary insurance amount and increased benefit levels under the social security
and the railroad retirement systems. Some 4.7 million aged widows will
receive benefits from social security in 1975 with 1.3 million widows
covered in other programs. There is considerable overlap of these
other program beneficiaries with those covered by social security.
Aged wives of retirees.—The entitlement of wives under OASI and
railroad retirement is independent of any contribution history of their
own, and requires only that they exceed a particular age. Where a
wife has dual entitlement under social security based upon her earnings
history, as well as her husband's, she will receive only the larger benefit. In the railroad retirement system, she receives both benefits.
In 1975, 506,000 wives will have duel entitlement under social security
in which the wife's benefit exceeds the benefit based upon her own
earnings.

164

THE BUDGET FOR FTSCAL YEAR 1975

Table K-5. BENEFITS FOR THE AGED EXCEPT ANNUITIES TO PRIMARY
BENEFICIARIES: BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
Benefits (millions)

Number of beneficiaries (thousands)
1973
1974
1975
actual
est.
est.

Average monthly
payments
1973 1974 1975
actual est.
est.

1973
actual
Benefits to aged widows:
Social security (OASDI) members
Railroad employees...
Federal civilian employees...
____
Uniformed
services
members
Coal miners
Benefits to aged wives of
living retirees:
Social security (OASDI) members
Railroad employees...
Minimum benefit payments:
Social security (OASDI) members
Railroad employees...
Dependents of aged retirees: Social security
(OASDI) members...
Aged retirees uniformed
services
_
Aged veterans
Medicare
Public assistance to the
aged, including refugees and Indians:
Old-age assistance..._
Supplemental security
income
Medicaid
In-kind benefits to needy

1974
est.

1975
est.

7,624
496

9,357
588

10,775
665

4,115
284

4,442
287

4,669
290

144
141

163
168

183
188

325

376

439

170

179

188

159

175

195

710
179

736
194

810
210

638
58

651
81

655
93

93
170

94
178

103
178

3,350
333

3,727
345

4,268
363

3,197
211

3,294
212

3,439
212

87
127

94
136

103
142

1,795
22

1,845
23

1,950
25

2,059
14

1,980
14

1,950
14

73
124

78
135

83
147

428

486

559

580

607

650

406
1,003
9,039

483
968
9,826

543
1,046
11,134

77
1,153
10,600

82
1,148
10,500

87
1,107
10,900

439
72
71

490
70
78

520
79
85

1.114

* 564

1,961

1,883

2,419
2,399

4,000

2 3

1,539

909
2,058

2,489
5,152

Foof..'.

126

165

205

810

859

Housing

252

297

346

814

925

Total

28,740 32,946 38,172

3,170 . . . .
5,141
32

827
1,023

56
33

56
39

....

.—

1
2
3

Benefits for first half of year.
Benefits for second half of year.
Includes $87 million in 1974 and $279 million in 1975 for Federal contributions to State supplementation payments.
4
Federal payment only.

Payments based on the minimum.—These are statutory minimum
amounts paid to retired workers, to the dependents of such retired
workers, and to noninsured beneficiaries age 72 and over.
Aged retirees of the uniformed services.—The retirement systems for
the uniformed and military services are noncontributory, with
benefits based on time in service and the rank achieved at the time of
retirement, rather than the overall earnings history of the individual.
Because military service is credited for social security coverage, there

SPECIAL ANALYSES

165

is substantial overlap between the military retirement systems and
OASL
Disabled.—The disabled constitute the second target group for
whom there is a presumption of permanent inability to achieve selfsupport. Eligibility for an income security benefit for the disabled
person may be based\on: membership in a contributory retirement
system (OASDI or civil service), on military service, on occupation
(coal miner), or on indigency (welfare).
Members of the social security system and the railroad retirement
system are eligible for retirement benefits computed on their earnings
history to the date of permanent disability. They are also eligible for
Medicare benefits. Federal civilian employees receive a disability
benefit based on total disability for his previous occupation—paying
a minimum benefit of 40% of the average of his highest 3 years of
earnings.
Table K-6. BENEFITS FOR THE DISABLED: BENEFITS, BENEFICIARIES,
AND AVERAGE PAYMENT
Benefits (millions)
1974
est.

1975
est.

Number of beneficiaries (thousands)
1973
1974
1975
actual
est.
est.

5,162

6,180

7,460

3,271

910
196
625

1,200
218
645
1,605

1,457
227
555
2,283

3,804
468

3,934
452

128

1973
actual

Civilian covered employment:
Disability insurance...
Federal civilian employees
Railroad employees_._
Coal miners.. . __
Medicare for the disabled
Uniformed services:
Military service-connected disability....
Other: income-tested..
Other:
nonincometested.
Public assistance to the
disabled, including
refugees and Indians:
" Aid to the blind
Aid to the permanently
and totally disabled.
Supplemental security
income
AFDC (disabled male
head of family)
Medicaid
In-kind benefits to needy
disabled: Food
Total

778
.

894

3,568

3,939

241
60
203

273
61
326
1,223

289 314
59 270
331 237
1,377 _.__

367 421
303 332
249 248
109 138

3,981
488

3,095
755

3,108
752

3,104
725

102
52

105
50

107
56

263

309

336

1,172

1,239

6
0
5
5

6
1
6
1

(2)

1453
34

Average monthly
payments
1973 1974 1975
actual est. est.

8
4

1,904

H.563

23
5

218

432
1,198

459
1,340

1,208
2,137

1,223
2,547

1,260
2,573

121

158

197

780

826

796

251

1
0
2
9

5 88 5 89

1,623

397
1,017

222

27
40

29
39

30
43

1
3

1
6

2
1

13,542 17,407 20,370

1
Benefits for first half of year.
2 Less than $500 thousand.
Benefits for second half of year.
« Includes $72 million in 1974 and $173 million in 1975 for Federal contribution to State
supplementary payment.
5
Federal benefit only.
3

166

THE BUDGET FOR FISCAL YEAR

1975

Benefits to the disabled in the uniformed services are scaled to the
degree of physical impairment rather than previous levels of earnings.
Disability retirement from the military, and veterans compensation
and indemnities, are both provided for disabilities which are presumptively service-connected. Veterans' pensions provide benefits to
persons who have seen wartime military service for non-serviceconnected but presumptively total disability where financial need can
be demonstrated.
Under the Federal Coal Mine Health and Safety Act, compensation
is paid to black lung victims in amounts related to the workmen's
compensation law provided for Federal employees (FECA). Eligible
persons began registering for benefits in the spring of 1970. Many
received a one-time retroactive benefit in 1973 and 1974.
Beginning in 1974, 1.6 million needy disabled will receive assistance under the new Federal supplemental security income program
enacted in 1972 to replace State administered programs of assistance
to the blind and disabled.
Approximately 3.9 million persons will receive disability benefits
under social security in 1975. Another 289,000 individuals will receive
benefits through Federal civilian employee programs. Allowing for
overlap, some 4.1 million persons receive disability benefits calculated
on their previous earnings. There is also substantial overlap between
this group and those receiving disability benefits because of prior
military service or employment in coal mines.
It is estimated that in 1975, 2.9 million adults and children will be
supported by public assistance based on disability. Nearly all of
these persons are eligible for Medicaid benefits.
Mothers and dependent children.—Benefit eligibility varies considerably for this last target group for whom self-support is not assumed
to be universally possible. This group includes mothers with dependent children and no male breadwinner. Eligibility is determined either
by the work history of a deceased husband or through a means test.
Table K-7. BENEFITS FOR MOTHERS WITH DEPENDENT CHILDREN AND
NO HUSBAND: BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
Benefits (millions)
1973
actual

1974
est.

1975
est.

Number of
beneficiaries
(thousands)
1973
actual

1974
est.

Average monthly
payments
1975
est.

Benefits to widows of covered
employees:
Social Security (OASDI)
members
4,699 5,171 5,913 3,454 3,589 3,682
30
12
12
Railroad employees
12
26
28
49
126
Federal civilian employees __
45
47
94
108
579
407
Uniformed service members.
558
353
369
572
29
Coal miners .
44
18
27
38
42
Public assistance (AFDC)
mothers with preschool
children:
Cash payments
1,769 1,923 1,936 5,380 5,446 5,615
Medical services
_ _
895 1,091 1,169 8,394 9,401 10,268
Total

7,844 8,732 9,625

1973 1974 1975
actual est. est.

250
172
175
53
269

250
190
192
54
787

279
213
214
59
780

27
9

29
10

29
9

SPECIAL ANALYSES

167

Transitional low income.—The intent of income security outlays
for able-bodied men and women is to tide over such persons during
intervals when they cannot support themselves, until other measures
correct the causes of such inability to provide self-support.
The major system of unemployment insurance, constituting 90%
of unemployment benefits paid in 1973, is State-administered. This
means that provisions, benefit levels, and duration of benefit availability varied by State.
Table K-8. BENEFITS FOR TRANSITIONAL LOW INCOME AND OTHER:
BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
Benefits (millions)
1973
actual
Temporary unemployment:
Unemployment insurance system
Other unemployment
benefits
Long-term
unemployment:
Unemployed fathers...
Mothers with all children in school
Other income-tested *_
In-kind benefits, low income:
Food 2
Housing 2
Medical
Subtotal, transitional low income
Uniformed services retirees under 65
_.
Food for nonneedy children
Other
Subtotal, o t h e r . . .
Total
1
2

4,405

1974
est.

1975
est.

4,652

6,126

Number of beneAverage monthly
ficiaries (thousands)
payments
1973
1974
1975 1973 1974 1975
actual
est.
est. actual est. est.

5,409

6,117

6,234

432

405

404

372

360

359

190

204

185

527

485

444

1,277
16

1,388
17

1,396
14

3,882
17

3,930
17

4,051
10

27
75

29
82

29
118

2,047
1,350
950

2,700
1,572
1,157

3,164 20,258
1,900 5,038
1,240 9,006

22,793
5,626
10,087

23,411
6,554
10,584

8
22
9

10
23
10

11
24
10

10,667

12,059

14,429

3,321

3,950

4,452

564
3,062

631
3,623

618 28,365
4,041

6,947

8,204

9,111

17,614

20,299

23,540

692

739
28,027

781
29,110

400

445 475

1
1
1
.... .... ....

Includes all AFDC related assistance to refugees and Indians.
Include all benefits to AFDC and UF families.

There are also unemployment benefit programs for Federal employees and ex-servicemen, railroad employees, and for unemployed
workers in industries adversely affected by foreign trade. These
programs are federally financed, but except for railroad retirement
unemployment insurance, are State-administered.
A second set of programs providing income security benefits to ablebodied men and women are means-tested cash and in-kind benefit
programs.

168

THE BUDGET FOR FISCAL YEAR 19 75

Additional benefits are provided to uniformed services retirees under
the age of 65.
Needs-tested benefits.—Public assistance, veterans and survivors
pension, Medicaid, and food and housing programs provide benefits to
individuals based on a test of need. In addition to that test, eligibility
for cash assistance may be based on such considerations as prior military service, age, disability, or absence of a male breadwinner in a
family.
Table K-9. NEEDS-TESTED BENEFITS BY TARGET GROUPS
AND PROGRAM
Benefits (millions)
1973
actual

17,901

Benefits to mothers:
Public assistance..
.
Veterans and survivors pension
Medicaid
Other

Benefits to the unemployed:
Public assistance
Other
Subtotal benefits to unemployed
Benefits, other:
Veterans and survivors pensions
All other
Subtotal, other
Public assistance
Veterans and survivors pension
Medicaid
Food
Housing

1,807
452
1,198
158

2,371
488
1,340
197

3,615

4,396

3,046
205
1,845
1,829

3,311
215
2,248
2,272

3,332
247
2,409
2,838

8,046

8,826

204
109

185
136

273

Subtotal, benefits to mothers

6,957

190
83

5,419

6,925

Subtotal, benefits to the disabled

2,434
1,573
2,399
551

2,837

Benefits to the disabled:
Public assistance. _
Veterans and survivors pension
Medicaid
Other

1,473
1,427
2,058
461

1,231
468
1,017
121

Subtotal, benefits to the aged

25,304

4,471

Benefits to the aged:
Public assistance
Veterans and survivors pension
Medicaid
Other

21,593

1,114
1,440
1,539
378

Total, needs-tested benefits

1974
estimate

1975
estimate

313

321

452
2,943

474
3,726

544
4,260

3,395

4,200

4,804

5,490
2,565
4,402
3,842
1,602

6,711
2,568
5,505
4,932
1,877

8,291
2,852
6,148
5,768
2,245

SPECIAL ANALYSES

169

Table K-10. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM
Benefit outlays (in millions of
dollars)
Department, agency and program

Department of Health, Education, and Welfare:
Social security:
Old-age and survivors insurance
Disability insurance
Hospital insurance
Supplementary medical insurance
Public assistance:
Maintenance payments.
Medicaid
Special benefits for disabled coal miners
Assistance to refugees
Public health service officers retirement
Medical care for retired commissioned officers
Proposed legislation included above__.__ _
Total, Health, Education, and Welfare
Veterans Administration:
Disability and dependency and indemnity compensation
Veterans and survivors pensions_.
Life insurance (net subsidy)
Other veterans benefits
Proposed legislation included above
_____
Total, Veterans Administration
Department of Labor:
Unemployment insurance (State programs)
Railroad unemployment
Unemployment compensation for Federal employees and exservicemen
_ _ _
_
Employee compensation
_

1973
actual

1974
estimate

1975
estimate

42,170
5,162
6,648
2,391

48,118
6,180
8,465
2,966

55,459
7,460
9,831
3,586

5,490
4,402
915
106
14
4

6,711
5,505
956
103
20
3

8,291
6,148
869
46
24
5
(—603)

67,302

79,027

91,718

3,836
2,565
21
114

3,909
2,568
17
170

3,946
2,852
18
107
(165)

6,536

6,665

6,923

4,405
73

4, 652
70

6, 126
67

391
220

365
259

366
297

5,088

5,371

6,892

4,390
357
4,747

5,158
427
(13)
5,585

5,740
478
(55)
6,218

2,136
1,342
90
274

2,887
1,660
93
292

3,830
1,705
119
113

3,842

4,932

5,768

Special benefits for disabled coal miners
Total, Labor
Department of Defense—Military:
Military retirement
Medical care for retirees
Proposed legislation included above
Total, Defense
Department of Agriculture:
Food stamps
Child nutrition
Special milk
Removal of surplus commodities
Total, Agriculture

170

THE BUDGET FOR FISCAL YEAR

1975

Table K-10. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM—Continued
Benefit outlays (in millions of
dollars)
Department, agency and program

Civil Service Commission:
Civil service retirement

1973
actual

1974
estimate

1975
estimate

4,295

5,672

6,917

4,295

5,672

6,917

2,388

2,657

2,972

2,388

2,657

2,972

1,043
107
453

1,166
144
567

1,325
189
731

1,602

1,877

2,245

Total, Transportation

Department of State:
Foreign Service retirement

Total, Civil Service Commission
Railroad Retirement Board:
Railroad retirement
Total, Railroad Retirement Board
Department of Housing and Urban Development:
Public housing
Rent supplements
Interest supplements
Total, Housing and Urban Development
Department of Transportation:
Coast Guard retirement

Total, State
Department of the Interior:
General assistance to Indians
Total, Interior
Department of Commerce:
NOAA officers retirement
Total, Commerce
Total, Federal outlays

95,949

111,957 129,842

SPECIAL ANALYSIS L
FEDERAL CIVIL RIGHTS ACTIVITIES
COVERAGE AND SCOPE OF THE ANALYSIS

This analysis of Federal civil rights activities comprises more than
the traditional programs and policies related to civil rights enforcement. In addition to Federal activities regarding the protection of
such rights as voting, public accommodations, fair housing, and equal
employment opportunity in the public and private sectors, there are
included Federal programs specifically related to the provision of
equality of other opportunities to certain identifiable minorit}- groups.
The latter programs include activities in desegregation assistance, civil
rights research and information dissemination, and the conciliation and
prevention of racial disputes. Total outlays have risen from $1.1 billion in 1970 to $3.5 billion in 1975.
Outlays for Civil Rights Activities
$ Billions

$ Billions

-4

4
Minority Assistance

3.5

3.4

Enforcement

3—

—3
2.6

2.1
O

2—
1.6

f.l

0.9

1969
Fiscal Yean

J970

1971

1972

f973

1974

J975
Estimate

171

172

THE BUDGET FOR FISCAL YEAR

1975

Further, there are included in this analysis programs which have
as their goal the broadening of economic participation on the part
of minorities including the achievement of self-determination by
American Indians. These programs include the efforts of Federal
agencies to foster minority business enterprise and to increase deposits
in minority-owned banks, education programs to expand assistance to
minority institutions, and Federal expenditures to improve the living
conditions of American Indians. The distinction between the categories
of funds discussed in this analysis is an important one and the
reader is cautioned to read carefully the definitions contained in the
footnotes to the various tables.
Table L-1. FEDERAL CIVIL RIGHTS OUTLAYS BY PROGRAM CATEGORY
(in millions of dollars)
1973
actual

Civil rights enforcement:l
Federal service equal employment opportunities. __
Military services equal opportunities 2
Private sector equal employment opportunities
Equal educational opportunity
Fairhousing 3
Enforcement and investigation4
Research and information dissemination
Indian programs
Civil rights conciliation and prevention of disputes

1974
estimate

1975
estimate

95.89
32.51
58. 63
61.97
12.63
36.72
7.38
.71
6. 64

117.60
48.19
77. 66
211.09
14.51
39.21
8.95
1.09
4.08

125.01
50.81
94.00
258.84
16.75
43.50
10.16
1.17
3.60

313.08

Subtotal

______

522.38

603.84

Minority assistance programs:
Minority business enterprise 6___
Indian programs7
Minority higher educational assistance 8
Subtotal
TotaL_.
1

law.
2

941.54 1,179.96 1,201.52
____ 1,285.00 1,581.00 1,605.00
__
66.22
98.60
120.16
2,292.76 2,859.56

2,926.68

2,605.84 3,381.94

3,530.52

Civil rights enforcement programs guarantee and protect the basic civil rights as defined by

Excludes outlays of $15.4 million for contract compliance, fair housing and title VI activities
reported elsewhere.
3
Excludes funds for contract compliance and departmental personnel who directly administer
housing and urban development programs but also concern themselves with the objectives of fair
housing laws.
* Includes all title VI efforts except HEW and H U D .
5 Minority assistance programs broaden opportunities for economic participation and selfdetermination.
6
Excludes the minority bank deposit program and Indian programs, but includes loans, surety
bonds, guarantees and 8(a) contracts at obligated values.
7
Indian outlays also include programs which do not deliver services or benefits exclusively to
American Indians.

SPECIAL ANALYSES

173

Programs relating to problems of the economically and socially
disadvantage^ even when they include substantial minority participation, whether in manpower training, community development,
or bilingual education, will generally not be treated as civil rights
activities for they are more properly considered in other analyses in
this document.1
Federal service equal opportunities.—The head of each Federal
executive department and agency is charged by Executive Order 11478
and the Civil Rights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972 (Public Law 92-261), with establishing
and maintaining an affirmative program of equal employment opportunity within the agency. Enforcement responsibility for the
Government-wide program is assigned by law and Executive order to
the Civil Service Commission and special procedures are available to
employees and applicants who believe they have been discriminated
against in any aspect of Federal service. Under these procedures,
26,627 persons contacted equal employment opportunity counselors
during 1973 for advice and assistance, and of this total, 2,743 filed
formal discrimination complaints. If equal employment opportunity
counseling, impartial investigation and a third-party hearing do not
resolve the matter to an individual's satisfaction, the complainant may
appeal to the Commission's Board of Appeals and Review or may file a
civil action in U.S. District Court.
Government policy is clear that personnel actions shall be free from
discrimination based on race, color, religion, sex or national origin
and in requiring Federal agencies to take affirmative action to assure
equal employment opportunity. Agency equal employment opportunity programs are documented in written national and regional
plans of action and are being changed to include newly required,
mutually agreed upon goals and timetables for increasing opportunities
for minorities and women. These plans must be submitted to the
Commission annually for review and approval. Careful consideration
is to be given to assure that recruitment activities reach all sources
of job candidates, that present employee skills are fully utilized, that
opportunities for upward mobility are provided and that managers
are trained with regard to their equal employment opportunities
responsibilities.
Outlays for Federal civil service employment opportunity programs
(including upward mobility) will increase by 32% in the 2 years,
1973 to 1975, to $125 million. Years of effort will increase by 892 to
3,849. Although firm projections on the results of these increased
efforts are difficult to make, the favorable trends observed in recent
years should continue.
1
For example, expenditures for minority participants in manpower training programs (41%)
are not included. See Special Analysis I, Federal manpower programs.

174

THE BUDGET FOR FISCAL YEAR 197 5

Increase in Minorities by Grades —May 1972-May 1973
Percent Change

12 —

1-4

5-8

9-11

!2-f3

14-15

16-18

"General Schedule and Similar Grade Groupings.

As of May 31, 1973, over one-fifth (20.4%) of Federal employees
were members of minority groups. Despite a decrease in overall
Federal employment, there has been a continuing trend of more
minorities in Federal service and increased representation of minorities
in the middle and upper grade and pay levels. (See chart above.) Under
general schedule and similar pay plans, more than 35,000 minority
employees were added to the roles between November 1969 and May
1973 and minority increases in the middle and upper grade levels
occurred at much faster rates than for nonminorities.
As of October 31, 1972, women occupied 40.3% of full-time nonpostal Federal white-collar positions and accounted for 58% of the
total net increase in Federal white-collar employment in the prior
year. Between October 1970 and October 1972, a time of decreasing
Federal employment, 7,270 more women held positions at levels
GS-7 through GS-12. At the same time, the number of women holding
positions at levels GS-13 and above increased by 650 or 9.2%.

SPECIAL ANALYSES

175

Two special emphasis programs address the specific employment
problems of particular groups. Within the overall equal employment
opportunity program, the Federal women's program addresses the
particular employment needs and problems of women, and the
Spanish-speaking program implements a 16-point Presidential mandate to provide opportunities for Spanish-speaking citizens. The
successful placement of many additional women and Spanish-speaking
Americans in middle-management and executive-level Federal jobs
during a period of employment contraction is largely attributable to
special efforts under this program.
Finally, under the Intergovernmental Personnel Act of 1970, the
Civil Service Commission provides financial and technical assistance
in personnel management and employee training and in monitoring
merit employment requirements applicable to many State and local
grant-in-aid programs. Major emphasis is placed on equal employment activity. Under this program, the Commission has:
• Awarded grants for 29 State and local government projects
relating to equal employment opportunity.
• Aided some 40 State systems subject to merit standards and more
than 400 State and local agencies administering grants-in-aid in
the development of affirmative action plans.
• Made over 3,000 contracts geared to removing artificial employment barriers and improved personnel systems at State and
local levels through expenditures for equal employment opportunity related technical assistance.
ID 1975, the Commission will award $1 million in grants under this act.
Military services equal opportunities.—Each of the military
services has placed equal opportunity officers and their staffs at various
levels within individual command structures. They guide, monitor, and
evaluate all matters pertaining to the equal opportunity and treatment of military personnel and their dependents and are responsible
for and participate in race relations councils, seminars, and training.
In 1975, outlays for providing equal opportunities for members of the
armed services, excluding contract compliance, title VI and fair housing
expenditures reported elsewhere, will increase 5.4% to $50.8 million.
An additional 476 years of effort will be devoted to securing compliance
with the law.
Equal opportunity for servicewomen has received added emphasis.
As the number of women in the military services continues to rise at a
rapid rate, greater utilization is being made of their talents. The Army
has now opened 90% of their enlisted occupational specialties to
women as opposed to 30% previously. The Navy has stationed a

176

THE BUDGET FOR FISCAL YEAR 19 75

limited number of women at sea and has started to train women as
noncombat pilots. The Air Force has increased the skill ladders open
to women from 43% to 98%. All services have opened their ROTC
programs to women and women serve at general/flag officer rank in
each of the military departments.
The Defense Race Relations Institute, located at Patrick Air Force
Base, Fla., trains officers and enlisted personnel for service with their
units as instructors. The institute has graduated over 2,200 instructors
from all the departments in the past 3 years. Training and education in
race relations are included in service schools ranging from basic training to the senior service colleges. Special programs are also designed
to increase minority participation in skilled jobs, examine current
testing procedures for cultural bias, and to utilize race relations
handbooks.
Recruiting efforts will continue to insure balanced minority participation in the military services. All services have increased the percentage of minority recruiters. One example of success is the service
academies where the enrollment of 362 minority cadets in the 1973
class is more than double the number entering in 1971. Presently there
are over 850 minority cadets enrolled in the academies. Significant
progress has also been made in procuring minority officers from
reserve officer training programs and officer candid ate/training schools
and in the detailing of qualified minority officers to attend senior
and intermediate level professional military schools. Programs have
also been established to recruit more minority lawyers as officers in
the military services7 Judge Advocate General Corps.
At the present time there are 16 minority general officers on active
duty. Prior to 1971 only four minority officers had ever achieved
general/flag officer rank in the entire history of the armed services.
Minority personnel have also been increasing their proportion in the
top enlisted ranks. For example, the top enlisted position in the Air
Force is currently held b}r a minority.
Private sector opportunities.—Title VII of the Civil Rights Act
of 1964, as amended, prohibits discrimination in employment on the
basis of race, color, religion, sex, or national origin by either employers,
unions, or employment agencies. Executive Order 11246, as amended,
requires Federal and federally assisted Government contractors and
subcontractors to provide similar opportunities. Outlays for the
agencies charged with these responsibilities, the Equal Employment
Opportunity Commission, the Justice Department, the Department of Labor and 18 cooperating agencies, will total $94 million in
1975, an increase of 21%.

SPECIAL ANALYSES

177

The Equal Employment Opportunity Commission will spend $52.8
million, an increase of 28%, to carry out its responsibilities relating
to nondiscrimination in employment. Projected cash benefits resulting
from Commission conciliations will grow from $2.2 million in 1969 to
$30.6 million in 1975. The Commission will double in 1975 to $5
million the amount of its grants to State and local agencies
responsible for the administration of State and local fair employment
practices statutes. These additional resources will allow such agencies
to expand their capabilities, particularly on cases referred by the
Commission.
Enforcement of title VII, as amended, is also the responsibility of
the Justice Department which, through conciliation and litigation,
seeks to secure compliance with the law where it finds patterns or
practices of employment discrimination in labor unions, companies,
or industries and, since March 1972, in State and local governments
and their agencies.
Although this responsibility is scheduled to be transferred to the
Equal Employment Opportunity Commission on March 24, 1974, the
Administration is proposing legislation to continue the authority in
the Justice Department for 2 additional years. In 1975, the Justice
Department plans to spend $2.9 million to help eliminate such discrimination in both the private sector and the State and local public
sectors. The effectiveness of this program can be measured by the
significant increase in the number of jobs in the private sector opened
to minority persons and women in recent years.
Executive Order 11246 prohibits the practice of discrimination in
Federal contracts, subcontracts, and on federally assisted construction
projects. Nondiscrimination assurances cover construction as well as
industrial work forces and require affirmative action on the part of
recipients of Federal contract moneys to promote the equal employment of minorities and women. In 1975, the Federal agencies responsible for implementing this order will spend $36.5 million, 48%
more than the 1973 outlays of $24.7 million. Approximately 500,000
new hires and promotions will have been promised in or achieved by
such action plans.

540-700
0 - 7 4 - 1 2

178

THE BUDGET FOR FISCAL YEAR 19 75

Equal Employment Opportunity Commission Activities
Completed Investigations

S Millions

40,000

80
Completed Investigations

32,660

EEOC Expenditures

-30,000

60
$52.8

-20,000

40-

20 —

10,000

$15.7.
7,320

197 i
Fiscal Years

1972

1973

1974

1975
Estimate

Sixty-three "citywide" plans for affirmative action in the construction industry, including the well-known "Philadelphia plan,"
have been put into effect. In addition, the Office of Federal Contract
Compliance, Department of Labor, is continuing to develop proposals
for statewide construction programs, which would cover all Federal
and federally assisted construction contracts. Alaska, Delaware, and
Rhode Island are already covered by such plans.
Efforts underway in 1974 to increase the effectiveness of both title
VII and Executive Order 11246 will be strengthened. Such efforts
include 2 the continued expansion of a performance management
system in the Equal Employment Opportunity Commission, improved information and management systems for Federal contract
compliance activities and the use of the management by objective
process.
Other highlights include:
• The Federal Communications Commission, an independent
regulatory agency, will spend $0.3 million in 1975 to investigate
complaints of employment discrimination by broadcasters,
cable television systems, and common carriers and to review
licensees' annual reports of employment patterns.
2
Under this system, managers define explicit program objectives, establish time-phased performance targets consistent with available resources, and then periodically must report comparisons
of accomplishments against targets.

179

SPECIAL ANALYSES
Federal Contract Compliance Activities
S Millions
60

Hires and Promotions, (Thousands)

600
Hifes and Promotions'

v
500,000

Contract Compliance Expenditures

50-

40-

500

-400
$36.5

30 —

-300
250,000

200

$13.3
-J00

1971

1972

1973

Fiscal Years

1974

1975
Estimate

nrrocts. Data prior to 197! i

• The Department of Labor will spend $3.2 million in administering the Equal Pay Act. In 1973, $18 million in back wages
was found owed to 32,000 employees, primarily women, as a
result of such efforts.
Equal education opportunity.—The Department of Health, Education, and Welfare and the Justice Department have primary
responsibility for assuring equal educational opportunity in public
schools for all citizens on a nondiscriminatory basis and to assure
that there is no discrimination against either faculty or administrators.
In 1975, educational programs in support of these goals will spend
$259 million, excluding capital assistance to predominantly black
colleges (developing institutions and land-grant colleges), an increase
of 23%.
To enforce Federal laws requiring equal education opportunities
for public school students, the Justice Department will spend $2.8
million in the coming year, an increase of 13%. Although substantial
compliance with the constitutional mandate has been achieved in
recent years, the Justice Department continues its enforcement supervision through 235 cases involving 540 school systems.
The desegregation of schools is progressing nationwide. In 1975, the
Administration will continue its commitment tc assist school districts in this important process by proposing new legislation to help
achieve this goal. In addition, under the emergency school assistance
program, outlays will grow from $197 million in 1974 to $242 million

180

THE BUDGET FOR FISCAL YEAR 1975

in 1975 to assist local educational agencies and other public or private
nonprofit institutions in further eliminating the effects of minority
group isolation in school systems.
Currently, the Federal Government is also taking steps to end the
discrimination against Spanish-speaking and other non-Englishspeaking pupils by insuring that special education programs and
bilingual and bicultural education programs are provided.
Title IX of the Higher Education Amendments of 1972 charged the
Department of Health, Education, and Welfare with the responsibility
of insuring n on discrimination on the basis of sex in some 2,700 institutions of higher education throughout the United States. In 1974,
the Department expects to conduct 224 onsite compliance reviews and
to investigate 173 complaints.
Fair housing.—Title VIII of the Civil Rights Act of 1968 makes
unlawful any discrimination on the basis of race, color, religion, or
national origin in the sale, rental, or financing of housing. Executive
agencies are required to cooperate with the lead agency in this area,
the Department of Housing and Urban Development (HUD), in the
administration of title VIII, and to conduct their programs and
activities in a manner that affirmatively furthers fair housing opportunities for all Americans.
Expenditures for the administration of fair housing programs in
executive departments and agencies will increase by 15% in 1975 to
$16.8 million.
• HUD will spend $4.7 million, an increase of 23%, to strengthen
its efforts under title VIII and enable it to reduce the backlog in
the reactive complaint system.
• The Department of Justice will spend $2.2 million in the development, litigation, and negotiation of cases to enforce title
VIII, an increase of 13%.
• The Department of Defense will spend $4.9 million to assure
the rights of all military personnel to available off-base housing.
• The General Services Administration (GSA) will spend $0.9
million to assure that federally constructed, purchase-contract
or leased space is located where there is an adequate supply of
low- and moderate-income housing available on a nondiscriminatory basis.
• In cooperation with the fair housing goal of the executive branch,
the independent Federal financial regulatory agencies will continue to monitor the institutions subject to their supervision to
assure that their real estate lending services are available without
regard to race, color, religion, or national origin.
HUD will continue its efforts to insure that the administration of all
Federal housing-related programs further the fair housing objectives
of title VIII. Such efforts include oversight of affirmative marketing
and advertising guidelines and policies for project selection of federally assisted programs; a national advertising campaign and expanded affirmative action programs aimed at all elements of the public;
and communitywide hearings and reviews of title VIII compliance.
The Justice Department has brought 154 suits against 427 defendants in 28 States and the District of Columbia aimed at securing

SPECIAL ANALYSES

181

comprehensive affirmative relief to correct the effects of past housing
discrimination and to maximize equal opportunity in the future. In
addition, more than 216 voluntary compliance agreements have been
negotiated with title insurance companies, real estate boards, private
apartment house owners, and realtors nationwide, increasingly involving associations rather than individual entities. The Department's
efforts are supplemented by private lawsuits under the Fair Housing
Act, and complaints to the Secretary of HUD.
The Defense Department expects to continue its successful implementation of the open off-base housing program. In 1967, less than
20% of the multiunit rental facilities surveyed were indicated as
available to all military personnel on an equal opportunity basis.
Today, 98% of surveyed facilities are pledged to a policy of nondiscrimination. Between 1969 and 1972 black military occupancy in
these facilities increased 50%. During 1973, Defense revised its procedures to take stronger measures against landlords practicing race
and sex discrimination. In 1975, Defense will devote 501 years of effort to furthering this record of achievement.
GSA, under Executive Order 11512, will expend 44 years of effort
on matters relating to the positive impact that selection of sites for
Federal facilities can have on the social and economic conditions in
Table L-2. FEDERAL CIVIL RIGHTS OUTLAYS BY TYPE OF ACTIVITY
(in millions of dollars)
1973
actual

Subtotal

1975
estimate

18.44
40.31
90.69
14.17
14.28
3.71
61.97
32.51
37.00

18.47
46.02
109.44
19.88
19. 38
3.91
211.09
48. 19
46.00

20.11
51.02
121.23
23.56
24.41
7.86
258.84
50.81
46.00

313.08

Civil rights enforcement: *
Complaint conciliation
Complaint investigation-_......
Compliance review and monitoring
Legal enforcement
Program direction, research and information dissemination
Technical assistance
Equal educational opportunity
Military services equal opportunities
Upward mobility

1974
estimate

522.38

603.84

Minority assistance programs:
Capital assistance—grants
Capital assistance—loans 3
Capital assistance—guarantees 3
Procurement from minorities 4
Program direction and support

1,369.04 1,696.22 1,757.48
340.84
525.91
525.00
181.41
181.41
149.32
388.25
441.23
475.18
13.22
14.79
19.70

Subtotal

2,926.68

Total

law.
2

2,292.76 2,859.56
2,605.84 3,381.94

3,530.52

Civil rights enforcement programs guarantee and protect the basic civil rights as defined by

Minority assistance programs broaden opportunities for economic participation and selfdetermination, including Indian programs.
3
Loans and guarantees are entered at their obligated value but do not necessarily represent any
Federal expenditure.
4
8(a) contracts are entered at their obligated values.

182

THE BUDGET FOR FISCAL YEAR 19 75

the area. GSA and HUD are continuing to develop affirmative action
plans where necessary to insure that an adequate supply of low- and
moderate-income housing will be available on a nond scriminatory
basis. For agencies like AEC, which procure space and facilities on
their own, efforts similar to the above will be carried out.
Civil rights enforcement.—Primary responsibility for the enforcement of civil rights laws and constitutional guarantees is vested in the
Justice Department. This includes the development, negotiation, conciliation, and litigation of cases and complaints. In 1975, the Justice
Department and other agencies with enforcement responsibility will
spend $43.5 million, an increase of 11%, to carry out the above mandate. In addition to activities related to employment discrimination,
fair housing and public education, which are treated elsewhere in this
analysis, the efforts of the Department will be directed toward increased compliance with those laws which prohibit the interference
with basic civil rights, including the right to vote and the use of
public accommodations and facilities. The Department will also coordinate more closely other Federal agencies' enforcement activities
under title VI of the 1964 Civil Rights Act which prohibits discrimination in federally assisted programs.
In 1975, the Justice Department will once again allocate resources
as necessary foi litigation to protect the civil rights of citizens who ma}^
have suffered violence or threats of violence including special protections for migrant workers, prison inmates, and American Indians.
Attention will also continue to be directed to civil litigation involving
injustices and substandard conditions in correctional institutions,
mental hospitals, and juvenile homes.
The voting rights program continues its efforts to secure to all citizens the right to register and vote without discrimination or intimidation. In addition, all proposed changes affecting voting under section 5
of the Voting Rights Act of 1965 are submitted to the Attorney General and must be investigated, reviewed, and adjudicated in the Department of Justice. 3,093 such changes have been received since 1970.
In support of the voting rights program, the Civil Service Commission
provides personnel to prepare and maintain lists of eligible voters and
to observe election procedures in States or other political subdivisions
designated by the Attorney General. The Commission receives complaints, hears and determines challenges, and assists in the defense of
challenge cases filed in the U.S. circuit courts of appeals. In 1975, the
Commission will spend $0.5 million to assist in this responsibility.
The coordination by the Justice Department of the title VI requirements of agency grant programs will in 1975 continue to emphasize, in
addition to litigation, the close monitoring of such operations in some
30 departments and agencies. Assisted by an amended Executive
Order 11247 strengthening the Attorney General's authority, this
stepped-up coordination should result in a continuing improvement
of title VI enforcement.
Civil rights research and information dissemination.—
Expenditures grouped in this category include all moneys for civil
rights activities not counted elsewhere as well as Federal research and
information dissemination efforts. Outlays will increase 14% in this
area to $10.2 million in 1975.

SPECIAL ANALYSES

183

• The Commission on Civil Rights will spend $6.74 million in 1975
to carry on its factfinding function relating to denials of equal
protection under the law.
• The Women's Bureau, Department of Labor, will devote $1.9
million to questions and issues relating to the utilization of
womanpower and the economic, legal, and civil status of women.
The Bureau works with appropriate State, national, international,
local, and union organizations, and concerned individuals in
achieving its goals and also provides support services to the
Citizens Advisory Council on the Status of Women.
• The Cabinet Committee on Opportunities for the SpanishSpeaking People which was established under law in 1969 for 5
years to advise on the particular needs and problems of the
Spanish-speaking, will spend $1.1 million in 1975. Not only has
the function of making Federal agencies aware of the needs of the
Spanish-speaking been largely accomplished but many Spanishspeaking employees have been hired to staff Federal programs.
Legislation will be proposed to extend the authorization of the
committee through June 30, 1975.
• The women's action program, Department of Health, Education,
and Welfare (HEW), will spend $0.4 million in 1975 to analyze
the effects of HEW programs on women and the changes required
to help attain equality for women.
• The Council of Economic Advisers will spend $0.1 million in
the coming year for the work of the Advisory Committee on the
Economic Role of Women which, together with supporting staff
work, will continue to develop improved information, identify
problems and make recommendations regarding women in the
economy.
Civil rights conciliation and prevention of disputes.—The

Community Relations Service of the Department of Justice was established by title X of the Civil Rights Act of 1964 to provide assistance to
communities in resolving difficulties arising from discriminatory practices which disrupt peaceful relations among citizens. It also seeks to
reduce and prevent racial tensions. The Service actively cooperates
with appropriate Federal, State, and local agencies, private and public
groups and individuals on methods and programs for the peaceful
resolution of racial disputes.
In 1975, the Service will spend $3.6 million to reduce racial tensions.
This will permit an expansion in crisis resolution and State liaison
activities. State liaison representatives will be working with State and
local officials in developing their own crisis contingency plans to enable
communities to eventually provide community relations services foi
themselves.
Indians.—The policy of the Federal Government relating to American Indians is set forth in the message sent to the Congress on July 8,
1970.
"Federal termination errs in one direction, Federal paternalism
errs in the other. Only by clearly rejecting both of these extremes
can we achieve a policy which truly serves the best interests of the
Indian people. Self-determination among the Indian people can

184

THE BUDGET FOR FISCAL YEAR 19 75

and must be encouraged without the threat of eventual termination. "
More and more tribes have been taking over services previously
performed by the Government on reservations thereby realizing
greater benefits of the Administration's policy of self-determination—
Indian solutions to local Indian problems. In addition to encouraging
tribes to provide basic social services and property management
themselves, the tribes participated in the development of the 1975
budget program of the Bureau of Indian Affairs (BIA) in the Department of the Interior. For the coming year, the BIA budget provides
59% of the funds for Indians on reservations and Alaska Natives.
Other highlights include:
• Payments to Alaska Natives from the Alaska Native fund will
total $72 million in 1975 to compensate them for their claims.
• An Indian self-determination block-grant program will be
established in 1975. More than $25 million will be offered to
Indians in lieu of some of the current economic and resource
development programs.
• Expenditures to protect the basic civil rights of Indians will
increase by 10% to $0.9 million in 1975. Both the Office of the
Solicitor, Department of the Interior, and the newly established
Office of Indian Rights, Department of Justice, will provide
legal services in this area. Legal research efforts under title
VIII of the Civil Rights Act of 1968 will continue at Interior.
• The numbers of Indians receiving higher education assistance
will grow 9% in 1975 to a total of 14,700. Particular attention will
be directed toward students in the professions of law, medicine and
dentistry.
• The National Council on Indian Opportunity, which serves as a
direct communications link between the Indian people and
appropriate officials of the U.S. Government, will spend $0.3
million to:
—encourage full use of Federal programs to benefit Indians;
—encourage interagenc}^ coordination and cooperation;
—measure impact and progress of Federal programs; and
—suggest ways to improve such programs.
This category is comprised of all expenditures on Indian programs.
In 1975, these programs will have outlays of $1.61 billion and support the economic and social development of American Indians on
reservations and Alaska Natives
Minority business enterprise.—The moneys and programs discussed in this section aim to broaden economic participation on the
part of minorities. Outlays for minority business enterprise are designed to increase minority business opportunities. Expenditures result
primarily from grants, loans, loan guarantees, and the provision of
special opportunities to minority entrepreneurs to provide goods,
labor, and services to either Federal agencies or contractors.

SPECIAL ANALYSES

185

The Office of Minority Business Enterprise (OMBE) was created
in the Department of Commerce on March 6, 1969 (Executive Order
11458), to coordinate all Federal programs which could be of assistance to minorities who seek to establish or expand businesses. It
offers advisory services and counseling and serves as a clearinghouse
for all information relating to minority enterprise.
To promote equality of minority access to business opportunities
and resources, OMBE stimulates the development of new areas of
assistance for minority business formation and strengthening both
in the public and private sectors. OMBE's scope was broadened on
October 13, 1971 (Executive Order 11625), to include grant and
contract authority to local and national business development organizations. Efforts to improve the management of OMBE programs
are being expanded and will concentrate on coordinating the minority
business efforts of the Federal Government.
Expenditures for program development and direction will grow
45% from $9 million in 1973 to an estimated $13 million in 1975.
Minority business development management and technical assistance
resources are expected to expand 114%—from spending of $30.2
million in 1973 to $64.7 million in 1975. Overall expenditures to
support OMBE efforts will total $77.6 million in the coming year,
which includes OMBE operation of the Community Development
Corporation program formerly funded by the Office of Economic
Opportunity, and should result in the following:
—1,200 new minority firms being established;
—4,300 existing minority firms being expanded;
— 5,000 minority business financing packages being obtained; and
—25,000 clients receiving management assistance.
Expenditures for minority business development occur throughout
the Federal Government and include:
• Outlays of $4.3 million in 1975 by the Small Business Administration to administer section 8 (a) of the Small Business Act.
This unique procurement tool permits SBA to obtain procurement
contracts from other Federal agencies and to award subcontracts
to the minority or disadvantaged to help them become owners of
self-sustaining manufacturing, construction, and other related
service enterprises. SBA expects to expand the contracts negotiated from 1,992 worth $208 million in 1973 to 2,500 worth
$250 million in 1975. Companies assisted will rise from 1,084 to
l,500.3
• SBA will have more than $651 million in loans and guarantees
obligated in 1975 for minority business development and expects
to award $5.0 million worth of contracts and grants for management and technical assistance.
3
All Federal procurement from minorities under sec. 8(a) is reported under the lead agency,
SBA.

186

THE BUDGET FOR FISCAL YEAR 1975

• Sixty-four minority enterprise small business investment corporations (MESBIC's) are currently in operation with a total
private capitalization of $25 million. With the provision of
Federal matching funds, this produces total capital of more than
$50 million. MESBIC's provide venture capital to expand the
range of financing opportunities available to minority enterprises.
This Administration amended the Small Business Investment
Act of 1958 to provide MESBIC's with a new source of equity
capital by authorizing the Small Business Administration to
purchase their preferred stock.
Total funding for minority business enterprise programs will
increase to an estimated $1.2 billion in 1975. Outlays for program
management are expected to grow to $19.7 million. Obligations for
loans and loan guarantees will amount to $525 million and $149
million, respectively. Special efforts to procure goods and services
from minorities will total more than $475 million. In the aggregate,
efforts to assist minority business development will expand 265%
between 1970 and 1975.
Deposits in minority-owned banks.—Between September 30, 1970,
when the Administration began a combined Government/private
sector program to increase deposit balances in minority-owned banks
by $100 million, and June 30, 1973, deposits in the Nation's 50
minority-owned banks increased by $537.7 million, an expansion of
110%. The primar}^ value of these programs, under the direction of
the Treasury Department and the Commerce Department respectively, has been to increase the earnings of the minority banks and
thereby enhance their ability to attract capital.

SPECIAL ANALYSES

187

Table L-3. FEDERAL CIVIL RIGHTS OUTLAYS BY DEPARTMENT AND
AGENCY (in millions of dollars)
1973
actual

Civil rights enforcement: *
Department of Agriculture
Department of Commerce
Department of Defense
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
_
Treasury Department
Atomic Energy Commission
Civil Service Commission2
Commission on Civil Rights
Environmental Protection Agency
Equal Employment Opportunity Commission
Federal Communications Commission _ _ _ _
General Services Administration
National Aeronautics and Space Administration
Postal Service3
Small Business Administration
Veterans Administration
Other independent agencies

9.43
.91
44.24
62.34
8.40
1.61
37.42
7.37
*
2.76
.79
1.49
96.39
4.62
.56
28.31
.21
3.15
.52

1974
estimate

10.18
.92
62.10
212.45
9.45
2.66
36.56
8.28
*
3.06
.82
1.85
118.00
5.91
.85
41.10
.28
4.11
.53

1975
estimate

10.82
.83
66.13
260.18
11.62
2.80
39.97
9.87
*
3.64
1.16
1.67
125.50
6.74
1.02
52.76
.34
4.67
.59

.68
.84
1.75

.80
.85
1.88

313.08

Subtotal

.55
.80
1.21

522.38

603.84

Minority assistance program:
Department of Agriculture
10.55
20.11
18.90
Department of Commerce
49.23
60.83
88.64
Department of Health, Education, and Welfare
73. 82
96.96
120.95
Department of Housing and Urban Development
_
67.99
68.82
37.42
5
Department of the Interior
._.
1,349.98 1,645.98 1,669.98
Department of Labor
_
15.45
16.07
16.63
Small Business Administration6
681.28
895.91
913.04
Other independent agencies
_________
44.46
54.88
61.12
Subtotal

2,292.76 2,859.56

2,926.68

Total

2,605.84 3,381.94

3,530.52

1
Civil rights enforcement programs guarantee and protect the basic civil rights as defined by
law.
2
All Federal service equal employment opportunity outlays, including upward mobility, are
reported under the lead agency, Civil Service Commission.
3
Postal Service outlays appear in the Annexed Budget.
i
Minority assistance programs broaden opportunities for economic participation and selfdetermination and include Indian programs. Loans, surety bonds, guarantees and 8(a) contracts
are included at their obligated values.
5
All Federal outlays for Indians are reported under the Department of the Interior.
6
All Federal procurement from minorities through sec. 8(a) of the Small Business Act is reported
under the lead agency, Small Business Administration.
*Less than $10 thousand.

188

THE BUDGET FOR FISCAL YEAR 19 75
CONCLUSION

The civil rights programs of the Federal Government are many
faceted. They range from the legal assurances of nondiscrimination to
the provision of employment and business opportunities. The steady
expansion in the resources dedicated to these efforts is evidence of the
intent to continue progress toward making equal opportunity a reality
for all Americans.

SPECIAL ANALYSIS M
FEDERAL PROGRAMS FOR THE REDUCTION OF CRIME
Reduction of crime is a high priority within the Federal Government. Nineteen Federal agencies and commissions participate in
providing an, effective national response to the crime problem. Federal
programs are not only concerned with enforcing statutes and administering criminal justice but are also designed to increase understanding of the causes of criminal behavior, prevent the commission
of criminal acts, rehabilitate offenders, and reform Federal criminal
laws. The goal is to reduce the rate of criminal violations, thereby
limiting the substantial economic and social costs of crime.
The Federal crime reduction program complements activities of
State and local governments, which bear the heaviest burdens and
widest responsibilities for law enforcement and administration of
justice. Federal assistance in the form of grants-in-aid, training, and
technical assistance contributes to the effectiveness of State and local
crime reduction programs.
ACCOMPLISHMENTS OF THE PAST YEAR

There were numerous accomplishments in the area of crime reduction during the past year. Among the most significant developments
were:
• Reduction of 2% in the Nation's crime during calendar year 1972,
the first actual reduction in the volume of crime since 1955.
• Creation of a consolidated Drug Enforcement Administration
within the Department of Justice to permit more effective enforcement of Federal narcotic laws and better coordination with
State and foreign governments in the overall effort to stem the
flow of illicit drugs.
• Increase in worldwide seizures of opiates (in heroin equivalent
pounds) from 5,500 in 1972 to 9,800 in 1973, and an increase in
drug arrests from 15,500 to 24,900.
• Enactment of the Crime Control Act of 1973, extending the Law
Enforcement Assistance grant program through 1976 and streamlining its administration to ensure a smoother flow of grants to
State and local governments.
• Convocation of the National Conference on Criminal Justice to
review the standards and goals formulated by the National
Advisory Commission on Criminal Justice and to develop a commitment and strategy for implementing standards and goals in
each State.
1975

BUDGET HIGHLIGHTS

Federal outlays for the reduction of crime will total $3.0 billion in
1975, as compared with $2.8 billion in 1974 and $2.3 billion in 1973.
189

190

THE BUDGET FOR FISCAL YEAR 1975

It is estimated that expenditures for this purpose by all levels of
government—Federal, State, and local—will exceed $19 billion in
1975. Of the $3.0 billion in Federal expenditures alone, $1.2 billion
or 4 1 % will be used to assist State and local governments to improve
their criminal justice systems. Outlays directed to other levels of
government in 1975 are 25% greater than the comparable figure in
1973. Once again in 1975, the Department of Justice will conduct the
most extensive Federal crime reduction program with expenditure of
$1.9 billion. The Department of the Treasury has the second largest
Federal program which is budgeted for $326 million in 1975.
Table M-1. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
AGENCY i (in thousands of dollars)
Outlays

Agency
1973
ctual

The Judiciary
Executive Office of the President
Department of Agriculture
Department of Commerce
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
General Services Administration
Veterans Administration
Other independent agencies
Total Federal outlays

1974
estimate

1975
estimate

73,745
83,698
92,267
11,605
70,979
38,368
6,440
7,105
8,018
1,280
1,878
2,378
5,182
5,755
5,815
132,118
196,997
219,986
34,800
34, 800
13,000
38,299
42,964
40,780
1,350,981 1,741,813 1,891,515
143,284
89,600
92,400
20,583
34,416
37,399
48, 743
32,585
30,134
252,700
291,344
326,376
93,412
97,916
69,791
80,053
92,346
82,251
469
991
2,026
2,293,694

2,825,187

2,952,504

1
Does not include Department of Defense—Military and $38.2 million of outlays for the U.S.
Postal Service which are included in the Annexed Budget for 1975.

Application of resources to the reduction of illicit drug traffic, a major
contributor to crime in America, will be expanded throughout the full
range of Federal criminal justice activities. The new Drug Enforcement Administration consolidates Federal drug enforcement activities previously scattered in five separate agencies. The Drug Enforcement Administration has responsibility for planning a comprehensive
Federal enforcement strategy and developing a coordinated program
consistent with that strategy. Outlays and narrative descriptions concerning the Federal drug enforcement program are found throughout
this special analysis, while a summary of expenditures related to
enforcing drug laws is contained in table M-2.

SPECIAL ANALYSES

191

Table M-2. FEDERAL OUTLAYS FOR DRUG ENFORCEMENT *
(in millions of dollars)

Agency

Department of Agriculture
Department of Defense—Civil
Department of Justice:
Drug Enforcement Administration
Law Enforcement Assistance Administration
Other activities
Department of State
Department of Transportation
Department of the Treasury:
Customs Service
Internal Revenue Service
Total Federal outlays
1

Outlays
1973
actual

1974
estimate

1975
estimate

1.3
.2

1.5
.2

77.3
28.5
2.9
20.6
.4

109.4
31.7
4.8
34.4
.5

135.9
50.2
5.2
37.4
.4

46.4
16.9

41.9
20.3

41.9
20.7

194.5

244.7

293.4

Does not include Department of Defense—Military and U.S. Postal Service.
CRIME REDUCTION PROGRAMS BY ACTIVITIES

Budget outlays included in this special analysis represent all Federal programs related to crime reduction except expenditures of the
Department of Defense.1 The analysis covers estimated costs of the
judiciary related to criminal adjudication. Even though such programs
may indirectly reduce crime, the analysis excludes general social
programs, unless they are clearly within the context of crime reduction
or prevention, such as vocational training of prisoners or treatment
and rehabilitation of narcotic addicts. This analysis does not include
background investigations for employment, administrative inspections, or investigations of a regulatory nature which might in rare
cases result in the application of criminal sanctions. Where activities
involve both criminal and civil proceedings, such as operation of
Federal courts, an allocation of outlays to the crime-related function
has been estimated. The narrative is not intended to be all-inclusive,
but rather highlights new initiatives contained in the 1975 budget and
portrays the wide range of activities and agencies involved in the
Federal crime reduction program.
Crime research and statistics.—Crime research and statistics encompass Federal activities designed to produce numerical data and
other information concerning crime, criminals, and the criminal justice
system, and to develop new techniques and methods for operation of
that system.
• Total Federal outlays for crime research and statistics are estimated to be $113 million in 1975. Of this amount $36.6 million
1
Defense Department outlays for crime reduction are not included in this analysis. However,
a summary of Defense Department outlays for law enforcements are estimated as follows (in thousands of dollars):
1973
1974 1975
Department of the Army
304,002 308,962 310,444
Department of the Navy
31,366
32,922
31,719
Department of the Air Force
407,957 399,032 400,355

Total. Department of Defense..

743,325

740,916

742,518

192

•

THE BUDGET FOR FISCAL YEAR 1975

will be spent for collection of quantitative data, and $76.7 million
for research. This compares with $104 million for research and
statistics in 1974.
During 1975 the Drug Enforcement Administration's catalog of
information and statistics on controlled substances will reach
maturity, providing a comprehensive data base for identifying and
investigating large quantities of abusable substances which may
be entering illicit markets.
The Coast Guard will continue research to improve its capability
for detecting pollution law violations by developing advanced
all-weather means of detecting, identifying, and quantifying discharges of oil and hazardous polluting substances.
The U.S. Postal Service will continue development of improved
postal security and detection devices such as a letter tracing
system, anti-tampering devices for mail sacks, and portable
containers for suspect letter bombs.
Expenditures by the Law Enforcement Assistance Administration
to develop and evaluate new enforcement technology will total
$29 million in 1975, while criminal statistical collection will
account for $33 million.

Reform of criminal laws.—Criminal law reform consists of efforts to
improve the effectiveness of criminal statutes and assure that they
accurately reflect the values and standards of our society.
• $5.5 million will be spent on criminal law reform in 1975, a 32%
increase over the comparable amount in 1974. Approximately
62% of the 1975 expenditures will support law reform efforts
in State and local governments.
• In 1975 the National Commission for the Review of Federal and
State Laws Relating to Wiretapping and Electronic Surveillance
will be conducting its first full year of study into the impact of the
Omnibus Crime Control Act of 1968 on the use of wiretaps for
law enforcement purposes.
• A special unit within the Criminal Division of the Justice Department has been created to establish procedures and coordinate
use of the immunity provisions of the Organized Crime Control
Act of 1970, as well as monitor requests for immunity.
• The Drug Enforcement Administration will continue drafting and
revising regulations and procedures, as well as gathering information for administrative hearings on provisions of the Comprehensive Drug Abuse Prevention and Control Act which will be
applicable to individuals and industry alike.
• During 1975 the Commission to Review National Policy Toward
Gambling will hold public hearings and conduct studies and
surveys to determine the nature, extent, and public attitude
toward gambling in order to formulate recommendations on a
national policy.
Prevention of crime.—Crime prevention includes efforts to limit the
probability that criminal acts will be committed through means other
than direct enforcement or general correctional activities. This category therefore encompasses public education, drug addict rehabilita

SPECIAL ANALYSES

193

Table M-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED ACTIVITY * (in thousands of dollars)
Major program and selected activity

Crime research and statistics:
Statistics on crime, criminals, and criminal justice system. _.
Research on criminal behavior and sociology of crime

Program total
Criminal law enforcement:
Investigations into violations of Federal criminal law
Federal police
Assistance to State and local governments for enforcement. _
Program total

28,374
45,675

33,902
70, 331

36, 595
76, 703

104,233

113,298

4^21?

5^545

23,603
117,850
66,667
173,006

34,092
245,368
82, 724
131,920

36,507
236,959
95,424
119,100

381,126

Services for prevention of crime:
Public education on law observance, enforcement, and crime
prevention
Special programs for the rehabilitation of narcotic addicts. _
Prevention and control of juvenile delinquency
Development of other community crime prevention services.

494,104

487,990

702, 239
102,175
145,249

766,104
107,009
208,260

832,175
116,978
219,878

949,663 1,081,373 1,169,031

Law enforcement support:
Criminal intelligence and information systems
Education and training of enforcement officers
Laboratories and criminalistics
International programs in support of domestic law enforcement

Program total
Rehabilitation of offenders:
Operation of Federal correctional institutions
Federal probation, parole, and community tieatment
Federal inmate education and training
Federal inmate medical treatment
Other programs supporting Federal corrections
Assistance to States and localities for improved correctional
programs
_

Planning and coordination of crime reduction programs

42,221
164,985
37,204

44,997
160,207
41,636

28,077

42,191

46,958

286,601

293,798

68,147
83,677

80,077
96, 336

91,607
103,904

45,078

58,132

60,662

196,902

Administration of criminal justice:
Conduct of Federal criminal prosecutions
Operation and support of Federal court systems
Assistance to States and localities for improved administration of justice

29,151
151, 385
28,115

236,728

Program total

234,545

256,173

132,478
15,550
9,467
9,190
1,967

199,921
18,912
11,230
11,382
2,065

179,972
22,230
12,872
12,934
2,473

229,110

307,778

327,170

397,762

551,288

557,651

54,726

68,828

69,018

2,293,694 2,825,187

2,952,504

Does not include Department of Defense—Military and U.S. Postal Service.

O - 74 - 13
540-700

1975
estimate

2^738

Reform of criminal laws

Total Federal outlays

1974
estimate

74,049

Program total

Outlays
1973
actual

194

THE BUDGET FOR FISCAL YEAR 1975

tion, juvenile delinquent programs, and projects to improve policecommunity relations.
• An estimated $488 million will be concentrated on crime prevention programs in 1975, representing a 28% increase above 1973.
• The bulk of the Federal drug treatment, rehabilitation, research,
and prevention programs will be located in the new National
Institute on Drug Abuse within the Alcohol, Drug Abuse, and
Mental Health Administration in HEW.
• New outreach programs linked with the criminal justice system
will be encouraged by the Special Action Office for Drug Abuse
Prevention in 1975 to bring into treatment hard-core addicts who
have not sought treatment or have dropped out of a program.
• The Urban Mass Transportation Administration expects to make
$2 million in grants to State and local governments in 1975 for
procurement of public transit equipment containing crime prevention devices.
• In 1975 HEW will fund sufficient drug treatment capacity to care
for every addict seeking help.
• During 1974 and 1975, the Law Enforcement Assistance Administration will encourage States and localities to adopt the crime
prevention standards developed by the National Conference on
Criminal Justice.
Criminal law enforcement.—Criminal law enforcement consists of
activities to detect, identify, and apprehend violators of criminal laws.
Federal support of State and local enforcement is included in this
category, as is investigation by Federal agents into the wide variety
of Federal offenses. Representative programs include policing of
Federal reservations, special activities against organized crime and
illicit drug trafficking, and grants to upgrade the effectiveness of State
and local law enforcement.
• Criminal law enforcement will account for $1.2 billion in outlays during 1975, including $220 million in support of State and
local enforcement programs.
• Additional personnel are being added to the FBI to assist in
automating its criminal fingerprint file and to purge and reorder
its extensive civil fingerprint file.
• The Internal Revenue Service will add 324 personnel to its tax
fraud investigative force in 1975 in order to intensify its effort
against tax evasion.
• The Department of Transportation and the Criminal Division in
the Department of Justice will be joining forces to foster improvements in State car title and registration systems in order to
frustrate false documentation by auto theft rings.
• The Department of Labor will continue to assist Federal strike
forces against organized crime by furnishing compliance officers
to identify, investigate, and assist in the prosecution of labor
racketeers who manipulate welfare and pension funds.
• In 1975 the Executive Protective Service will provide expanded
protection for foreign diplomatic missions against potential terrorist and other criminal activity.
• Nearly 300 border patrol agents will be added to the Immigration
and Naturalization Service in 1974 and 1975 to strengthen an

SPECIAL ANALYSES

•

195

enforcement program which apprehended 466,755 unlawful aliens
and seized 107 tons of marihuana daring 1973, both record highs.
The Securities and Exchange Commission will continue to give top
priority to cases involving organized crime, particularly those
instances concerning criminal infiltration into the securities
industry.
During the next year the Bureau of Alcohol, Tobacco, and Firearms expects to more than double its identification of firearms
used in criminal acts, which will assist Federal, State, and local
law enforcement.
A drug diversion investigation program, conducted by the Drug
Enforcement Administration and funded by the Law Enforcement
Assistance Administration, will encourage States to curb the
illicit diversion of drugs at the retail level in 1975.
A new Surface Law Enforcement Patrol will be operated in
Florida during 1974 and 1975 by the Coast Guard to implement
the United States-Cuba antihijacking agreement and to act as a
deterrent to narcotics smuggling and introduction of illegal aliens
into this country.
During 1974 and 1975 the Federal Aviation Administration will
continue to direct the intergovernmental effort targeted against
hijacking, which prevented any successful attempts in 1973.

Law enforcement support.—Law enforcement support entails activities contributing to the effectiveness of criminal law enforcement.
Included are operation of criminal intelligence systems, education and
training of enforcement officers, activities of forensic laboratories, and
international programs supporting domestic enforcement efforts,
primarily in the area of narcotics control.
• Outlays of $294 million are projected for law enforcement support
in 1975. Of this amount, $207 million will assist State and local
enforcement by funding laboratories, training programs, and
criminal intelligence networks.
• Construction contracts of $19 million are planned in 1975 for the
new Federal Law Enforcemen Training Center, which will
provide basic and specialized training to Federal personnel in a
variety of law enforcement subjects.
• The Drug Enforcement Administration will support State and
local drug enforcement activities in 1975 by conducting 60
schools for 4,300 law enforcement officers, training 100 chemists
in 5 forensic workshops, and analyzing an estimated 22,350
drug exhibits for non-Federal police agencies.
• The Veterans Administration will provide financial assistance for
15,500 policemen to pursue on-the-job training and related
academic instruction during 1975.
• In 1975 the Treasury Enforcement Communications System
operated by the U.S. Customs Service will be expanded to make a
comprehensive smuggling intelligence file available to enforcement officers at all major international airports and some seaports
in the United States.
• During 1975 the State Department will use Foreign Assistance
Act funds to continue to support foreign governments in their
efforts to disrupt the flow of illicit narcotics to the United States

196

THE BUDGET FOR FISCAL YEAR

1975

through training in drug enforcement and intelligence, equipment procurement, advisory assistance, and crop substitution
projects.
Administration of criminal justice.—This category includes the
preparation and prosecution of criminal cases, operation of court
systems, trial of cases, provision of adequate defense, and related
supporting activities.
• Over $256 million will be devoted to prosecution of criminal
cases and administration of criminal justice in 1975, including
$61 million for assisting State and local prosecution and court
systems. Operation of the Federal judiciary will require expenditure of $104 million in 1975; criminal prosecutions will
account for $92 million.
• The addition of 241 people to U.S. Attorneys' offices in 1975 will
be applied to reduce the large number of criminal cases declined
for prosecution each year due to lack of litigative resources.
• The fees and expenses of witnesses appearing on behalf of the
Federal Government to provide factual information or expert
testimony will require expenditure of $12 million in 1975.
• The Antitrust Division of the Department of Justice will use a
13% personnel increase in 1975 to expand its economic analysis
of anti-competitive practices in order to improve enforcement of
antitrust and consumer protection cases, particularly in those
matters related to energy.
• The Federal court system will improve its ability to handle
criminal cases through a 12% increase in support personnel in
1975.
• In coordination with the Criminal Division and the Internal Revenue Service, the Tax Division of the Justice Department will increase its prosecutive efforts against organized crime racketeers
during 1975.
• Working with U.S. district courts and magistrates, the National
Park Service will initiate a new procedure in 1975 to permit
violators of petty Federal offenses to forfeit collateral rather
than unnecessarily clog court dockets.
• During 1975 the Drug Enforcement Administration will continue
to assist State officials prosecute cases under State uniform
controlled substances acts and conduct revocation proceedings
before State licensing boards.
• The U.S. Marshal Service will establish coordinators in each
Federal appellate district during 1975 to supervise and upgrade
the service of Federal warrants by deputy marshals.
Rehabilitation oj offenders.—These programs encompass Government
custody and rehabilitation of criminal offenders, including supervision
and operation of correctional institutions, inmate and offender treatment and training programs, probation and parole services, and other
supportive functions.
• Expenditure of $558 million will support rehabilitation of offenders in 1975, as compared with $551 million in 1974 and $398
million in 1973. Of the 1975 total, $327 million will be allocated
to non-Federal correctional activities.

SPECIAL ANALYSES

197

• During 1975, $222 million will be spent on correctional programs
of the Bureau of Prisons, with emphasis on developing a balanced
system of community and institutional facilities for the reintegration of offenders into society.
• The U.S. Board of Parole will regionalize its operations and implement new decisionmaking criteria to ensure greater equity,
consistency, and speed in the parole process in 1974 and 1975.
• The Probation Service of the Federal judiciary will add 340
officers in 1974 and 320 officers in 1975 to improve probation
and parole supervision.
• HEW will make grants of $4.2 million in 1975 to enable an
estimated 67,800 inmates in penal institutions to enroll in adult
education classes aimed at providing at least a high school
education.
Planning and coordination.—Included in this categoty are outlays
supporting State and local criminal justice planning, as well as coordination of Federal enforcement activities internally and with international enforcement efforts.
• Approximately $69 million will be spent on planning and coordination of crime reduction programs in 1975, consisting
primarily of $62 million n expenditures by the Law EnforcementAssistance Administration to encourage State and local governments to plan and evaluate their criminal justice activities.
• The Special Action Office for Drug Abuse Prevention will continue to plan and coordinate all Federal drug abuse prevention
and treatment activities during 1975.
• In 1975 the Department of State will continue to work with foreign
governments and international organizations to implement drug
control policies and coordinate interagency participation in the
international narcotics control effort.
• New cabinet subcommittees on domestic enforcement and treatment will coordinate Federal interdepartmental drug abuse
activities during 1975.
Table M-4. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY * (in thousands of dollars)
Outlays
Major program and agency

1973
actual

1974
estimate

1975
estimate

Crime research and statistics:

The Judiciary
Executive Office of the President
Department of Agriculture
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Justice
Department of Transportation
Department of the Treasury
Other independent agencies
Program total

629
648
1,285
14
3,411
65,049
2,061
840
112
74,049

81
9
39
1
1,527
1
6
3,776
92,686
4,178
80
4
104,233

1,168
1,549
1
7
3,754
102,574
3,396
80
4
113,298

198

THE BUDGET FOR FISCAL YEAR

1975

Table M-4. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)—Continued
Major program and agency

Reform of criminal laws:
Department of Justice
Other independent agencies

Program total
Law enforcement support:
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of the Interior. _
Department of Justice
Department of State
Department of Transportation
Department of the Treasury
General Services Administration
Veterans Administration

Program total

3,645
570

3,985
1,560

4,215

5,545

10,957
138
75,045
29,500
876
108,253
128,500
148
27,709

66,445
150
137,451
29,500
1,074
149,039
81,200
100
29,145

33,368
152
160,462
11,000
989
169,419
84,000
2,000
26,600

381,126

Program total

Administration of criminal justice:
The Judiciary
Department of Defense—Civil
Department of the Interior
Department of Justice
Department of Transportation

1975
estimate

2,738

Services for prevention of crime:
Executive Office of the President
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of Transportation
Veterans Administration

Program total

1974
estimate

2,738

Program total

Criminal law enforcement:
Department of Agriculture
Department of Commerce
Department of Defense—Civil
Department of the Interior
Department of Justice
Department of Labor
Department of Transportation
Department of the Treasury_._.
General Services Administration
Other independent agencies

Outlays
1973
actual

494,104

487,990

5,155
1,280
3,961
35,573
512,145
3,600
46,452
248,598
92, 542
357

5,578
1,878
4,404
39,805
618,997
3,400
28,219
283,252
95,419
421

6,469
2, 378
4,433
37,363
697,756
3,400
24,642
322,333
69, 791
466

949,663

1,081,373

1,169,031

133
5,825
314
154,221
19,679
80
3,262
870
52,344

147
7, 500
399
172,138
33,381
86
7,252
2,497
63,201

155
7, 500
435
190,494
36,266
94
3,203

236,728

286,601

293,798

63,583
80
1,145
132,092
2

71,503
90
1,286
161,664
2

78,097
96
1,564
176,414
2

196,902

234,545

256,173

55,651

SPECIAL ANALYSES

199

Table M-4. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)—Continued
Major program and agency

Rehabilitation of offenders:
The Judiciary
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Program total
Planning and coordination of crime reduction programs:
Executive Office of the President
Department of Justice
Department of State
Program total
Total Federal outlays
1

Outlays
1973
actual

1974
estimate

9,533
856
47,837
5, 300
391
322,661
11,184

11,304
948
48,270
5, 300
400
480,066
5,000

13,002
962
48,270
2,000
429
487,988
5,000

397,762

551,288

557,651

53,822
904

4,215
63,578
1,035

5,000
62,885
1,133

54,726

68,828

69,018

2,293,694 2,825,187

2,952,504

Does not include Department of Defense—Military and U.S. Postal Service.

1975
estimate

200

THE BUDGET FOR FISCAL YEAR 19 75

Table M-5. SELECTED CRIME REDUCTION DATA (dollars in thousands)
1971

Federal outlays for crime reduction:
Federal crime reduction outlays assisting States and localities.. . . .
_
.
Federal crime reduction outlays for reduction of Federal
crimes
Total Federal outlays for reduction of crime

$414,773

1972

$674,785

$1,352,755 $1,806,393 $2,293,694

CSC jobs classified in series 1811 as of October 31.
Includes internal security functions transferred into the Criminal Division.
From FBI uniform crime report.
Not available.
Reflects closing out case backlog where no further investigation was warranted.
Excludes transfers.
Excludes pending cases of fugitives.

$966,863

$937,982 $1,131,608 $1,326,831

Federal personnel:
Full-time Federal criminal investigators *
15,489
17,507
U.S. attorneys and assistant attorneys (man-years on
criminal workload)....
712
763
Attorneys—criminal division (man-years)
239
271
U.S. district court judgeships
402
498
State and local crimes: 3
Serious crimes recorded (UCR-table 2)
5,955,200 5,891,900
Violent crimes recorded (UCR—table 2)
810,020
828,150
Rate of serious crimes per 100,000 inhabitants (UCR—table
2)
.
.
2,907
2,830
Rate of violent crimes per 100,000 inhabitants (UCR—
table 2)
.
.393
398
Percent index crimes cleared by arrest (UCR—table 13 in
1971, table 15 in 1972)
.
20.9
22.0
Percent found guilty of persons charged by police (UCR—
table 15 in 1971, table 18 in 1972)
64.7
65.2
Federal investigations:
FBI, investigative matters received
828,059
824,252
Immigration and Naturalization Service (investigations
completed)
28,542
30,245
Postal Service, criminal caseload
510,220
462,671
IRS, cases closed
7,381
8,518
U.S. Customs Service, cases closed
38, 062
40, 076
Secret Service, cases closed
132,750 » 158,871
Bureau of Alcohol, Tobacco, and Firearms, cases closed
6,339
6,964
Disposition of Federal criminal matters:
Investigative matters presented for prosecutive decision—
prosecution declined
94,032
119,064
Federal criminal cases commenced 6
41,290
47, 043
6
Federal criminal cases terminated
37,715
46,090
6
Federal criminal cases pending
24,485
25,438
7
Federal criminal cases pending over 6 months
6,602
5,462
Federal criminal defendants convicted
33,604
39,587
High echelon organized crime figures convicted
61
60
Corrections:
Average Federal jail population
4,733
5,160
Average Federal prison population. _ . . .
20,949
21,329
Court commitments to Federal institutions
12,613
13,677
Average Federal prison sentences (months)
47.8
47.9
Persons under supervision of Federal probation system (end
of year)
42,549
49,023
Federal paroles granted
5,851
6,174
Warrants issued for violation of conditions of release from
prison
2,044
1,906
Executive clemency petitions granted
173
255
1
2
3
4
5
6
7

1973

19,117
2

722
366
498

(4)
(4)
(«)
(*)
(<)
(4)
774,579
30,940
339,350
8,500
40,276
124,389
5,403
93,926
40,367
41,389
24,416
5,114
37,261
69
5,870
22,294
15,677
51.0
54,346
6,339
1,635
207

PART 3

SPECIALIZED ASPECTS AND
VIEWS OF FEDERAL PROGRAMS

201

INTRODUCTION
Part 3 discusses trends and developments in selected areas of Government activity—aid to State and local governments, research and
development, and environmental quality. It groups three special
analyses, those designated N through P.
Special Analysis N summarizes Federal grants to State and local
governments as well as loans and indirect assistance. It traces the development of Federal aids over time and relates them to the finances
of both the Federal Government and State and local governments.
This analysis also provides a profile of Federal grants by region, and
that portion benefiting metropolitan areas.
Special Analysis 0 identifies Federal programs for the conduct of
research and development, and for facilities related to such activities.
Special Analysis P identifies Federal funding for selected environmental activities, including pollution control and abatement, environmental protection and enhancement, sewer and water programs,
and understanding, describing, and predicting the environment.
202

SPECIAL ANALYSIS N
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
Federal Grants to State and Local Governments
% Billions

$ Billions

60
General Revenue
Sharing,

50-

-50

-40

40Total

30 -

20-

10-

1965

1966

1967

Fiscal Years

1968

1969

1970

1971

1972

1973

1974

1975

Estimate

In 1975, Federal aid to State and local governments is expected to
total $52.0 billion, including $256 million in net loan outlays. This
represents an increase of $3.3 billion over 1974, and an average
annual increase of 17% for the last 5 years.
The 1974 and 1975 totals tend to understate the amount of Federal
aid compared to previous years. Supplemental Security Income, the
public assistance program for the aged, blind, and disabled, changed
on January 1, 1974, from a Federal grant program to a program
administered by the Social Security Administration. This shift, which
results in direct Federal benefit payments to individuals, reduces
the amount of Federal assistance provided in the form of grants by
$900 million in 1974 and $1.6 billion in 1975 without decreasing
(and often increasing) benefits. The shift also results in significant
savings for many States, since the State matching share, new benefit
liberalizations, and former State administrative costs will now be
borne by the Federal Government.

203

204

THE BUDGET FOR FISCAL YEAR 1975

The grant totals also do not include many other Federal activities
that affect the finances of State and local governments. For example,
State and local borroAving costs are significantly reduced by the
exemption of interest on their securities from Federal income taxes
and by interest subsidies in lieu of tax exemption. Similarly, since
taxpayers may deduct State and local taxes from Federal taxable
income, a portion of State and local taxes is offset by a reduction in
taxpayers' Federal liability. In addition, there are many indirect
savings to State and local governments through Federal technical
assistance, publications, and similar services.
HIGHLIGHTS OF THE FEDERAL AID PROGRAM

The Administration has made—and will continue to make—significant initiatives in the area of Federal aid. These initiatives have
centered around the New Federalism objectives of simplifying Government operations and transferring planning and management functions
to State and local governments. The 1975 Federal-aid program highlights both recent accomplishments and further initiatives in this area.
The recently enacted Comprehensive Employment and Training Act
consolidates major existing programs, and provides assistance to
State and local governments for the development and operation of
comprehensive manpower programs tailored to meet local needs.
The budget provides $2 billion in outlays for this program in 1975.
Law Enforcement Assistance grants are now demonstrating the
feasibility of flexible, broad-based formula grants. Grants under this
program will increase 6% to $747 million in 1975, as the Law Enforcement Assistance Administration continues efforts to delegate planning,
project approval, and monitoring functions to State governments.
The Environmental Protection Agenc}^ is another example of an
agency which has delegated significant responsibilities to State and
local governments. Outlays for EPA's waste water treatment grants
will continue to rise dramatically in 1975, increasing 68% to $3.4
billion. Outlays will rise further in 1976.
The budget continues the phaseout of seven inflexible and restrictive categorical programs for community development, thereby
creating room for more effective programs to assist local governments.
Broad-based support for locally designed community development
programs would begin under the Administration's proposed Better
Communities Act. Originally submitted to the Congress 3 years ago,
the proposed program will be funded at $2.3 billion in 1975.
A new Unified Transportation Assistance Program would allow
States and localities to allocate funds among urbanized area highway
projects, low capital-intensive highway improvements, mass transit
capital investments, and transit operating assistance on the basis of
their own priorities. This program is the first which would allow
Federal funds to be used for transit operating assistance.
The consolidation of elementary and secondary, vocational, and
adult education programs is also anticipated. These Consolidated
Education Grants would provide State and local governments with
greater freedom to adapt Federal programs to local needs.
The proposed Responsive Governments Act will improve and expand
current efforts to help State and local governments strengthen their

SPECIAL ANALYSES

205

decisionmaking and managerial capabilities. Grants for this activity
would increase in 1975 to $110 million.
Food Stamp outlays in 1975 are expected to total $3.9 billion. This
represents an average annual increase of 34% since 1973, and results
from expanded eligibility and the liberalization of benefits.
The Administration is also proposing National Health Insurance
legislation to Congress. The proposed program relies on private
insurance offered by employers and a Federal-State partnership to
assure that all Americans can obtain comprehensive health insurance
at affordable rates. The Federal-State partnership will involve
substantial future grants-in-aid to State governments.
Table N-l. FEDERAL-AID EXPENDITURES BY AGENCY (in millions of dollars)
1973
actual

Agency

Funds appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Defense—Civil
Department of Health, Education, and Welfare
Deparcment of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Environmental Protection Agency
District of Columbia
Washington Metropolitan Area Transit Authority
Other
Total expenditures for Federal grants

1974
estimate

1975
estimate

1,103. 1 1,080.5
718.4
4,332.5 5,542.7 6,324.5
261.1
262.6
311.8
53. 4
42. 3
42. 7
3.0
3.0
3.0
18, 219. 6 20,083. 7 20, 587. 3
2, 970. 5 3, 289. 2 3, 684. 0
408.2
484.9
573.2
526.3
707.7
747.2
2,878.1 2,585.4 2,580.6
6.3
8.3
8.5
5,272.4 5,239.8 5,656.5
6,822.6 6,351.7 6,384.0
745. 1 2, 085. 1 3,470. 9
181.5
190.0
231.5
75.8
182.9
184.4
102.9
152.9
222.9
43,962.5 48,293.0 51,731.5

In total, Federal aid will finance about 22% of State and local
expenditures in 1975. As can be seen in table N - l , about 40% of
this aid is administered by the Department of Health, Education, and
Welfare.
HISTORICAL PERSPECTIVES

The first national grant-in-aid took place in 1785, when Congress
provided grants of land to support education in the Northwest Territory. Land remained the principal form of Federal aid for many years
thereafter.
The first revenue sharing took place in 1837, when the Federal
Government distributed $28 million of surplus revenues among the
States on the basis of congressional representation. Interestingly, the
money was only "deposited" with the States, since the constitutionality of direct money grants to the States was questioned. No repayment was ever demanded, however, and no restrictions were placed on
the use of the money. The program lasted only 1 year, and ended when
the depression of 1838 eliminated the Federal surplus.
The basic structure of today's categorical grants originated with the
Morrill Act of 18o2, which established minimum standards for States

206

THE BUDGET FOR FISCAL YEAR

1975

to qualify for grants of land to support higher education. These requirements included a definition of objectives, State matching, and a report
on the use of lands.
Grants-in-aid thus have a long history, actual^ predating the
Constitution. They did not become a truly significant factor in governmental expenditure, however, until the last two decades. As recently
as 1950, Federal grants to State and local governments totaled only
$2 billion, and by 1960 they had risen to only $7 billion. In 1975, they
are estimated to reach $52 billion, an annual average increase since
1969 of 17%.
Table N-2. PERCENTAGE DISTRIBUTION OF FEDERAL AIDS TO STATE
AND LOCAL GOVERNMENTS BY FUNCTION
Function

Agriculture and rural development
Natural resources and environment
Commerce and transportation
Community development and housing.
Education and manpower
Health
Income security
General Revenue Sharing
General government and other
Total

1950

1955

1960

1965

1970

1975

actual

estimate

5
2
21
(l)
11
5
55
1
100

7
3
19
3
14
4
47
2

4
2
43
3
10
4
33
1

100

5
2
40
5
10
7
29

2
100

3
3
21
11
18
15
26

2
8
13
8
13
17
25
12
3

100

i Less than 0.5%.

The functional composition of the grant program has changed significantly over the years, as shown in table N-2. The most dramatic
growth has occurred in the health area, which has increased from 4%
of Federal aid in 1960 to an estimated 17% in 1975. The most striking
recent changes are the addition of General Revenue Sharing in 1972
and the increases in outlays for environmental protection.
The structure of the grant system has also changed significantly in
recent years. Grant programs were originally set up to meet specific
categories of national needs. Federal controls were imposed to ensure
that funds were used to satisfy those needs. As the grant system grew,
new programs—frequently overlapping existing programs—were
established to meet other needs as perceived by other sponsors. While
these "categorical" grant programs were often beneficial, the uncoordinated nature of the resulting system created many problems,
including:
• Excessive Federal administrative requirements.
• Rigid funding and organizational arrangements, such as matching
fund requirements, which were unresponsive to changes in priorities over time.
• Unnecessary limitations on the authority of State and local
elected officials, often imposed by remote Federal officials with
little understanding of local problems.
• The creation of competitive and duplicative State and local governmental institutions.
In the late 1960's and early 1970's, two forces merged to provide
a strong impetus for reform. First, many State and local governments

SPECIAL ANALYSES

207

were experiencing fiscal difficulties, as the demand for higher levels of
public services escalated. The Federal Government responded with
large increases in aid through categorical grant programs. While this
relieved much of the fiscal pressure on these governments, it aggravated the problems inherent in the categorical grant structure.
Simultaneously, a strong interest developed in better defining the
appropriate functional responsibilities of different levels of government
and in distributing decisionmaking authority according^. Consistent
with the philosophy of the New Federalism, the Administration began
to differentiate those programs that clearly involve national responsibilities from those which could be better administered at the State
and local level.
As a result, during the last 5 years the expansion of grant expenditures has been accompanied by continued reform efforts. Within the
context of an improved State and local fiscal situation—aided by
continued substantial Federal assistance—these reform efforts will continue to be the focus of the Federal aid program.
REFORM OF THE GRANT SYSTEM

Efforts to reform the grant system have focused on four basic
approaches, all of which further the New Federalism:
• Decentralization of program management functions to Federal
field officials;
• Maximum possible sharing of planning and management functions with State and local governments;
• Consolidation of overlapping Federal grant programs; and
• Simplification of Federal grant administrative requirements.
Table N-3. PER CAPITA DISTRIBUTION OF GRANTS 1 BY FEDERAL
ADMINISTRATIVE REGIONS, FISCAL YEARS 1969-73
Regions

I—Maine, Vermont, New Hampshire, Massachusetts,
Connecticut, Rhode Island
II—New York, New Jersey, Puerto Rico, Virgin Islands
III—Virginia, Pennsylvania, Delaware, Maryland,
West Virginia, District of Columbia
IV—Kentucky, Tennessee, North Carolina, South
Carolina, Georgia, Alabama, Mississippi, Florida..
V—Illinois, Indiana, Michigan, Ohio, Wisconsin,
Minnesota
VI—Arkansas, Louisiana, Oklahoma, New Mexico,
Texas
_
VII—Iowa, Kansas, Missouri, Nebraska
VIII—Colorado, Montana, North Dakota, South
Dakota, Utah, Wyoming
IX—Arizona, California, Nevada, Hawaii, other
territories
X—Idaho, Oregon, Washington, Alaska
United States
1

1969

1970

1971

1972

1973

101.9

118.6

144.2

175.3

202.4

103.2

118.6

159.4

209.7

234.8

94.5

126.6

147.2

163.6 219.5

100.8

117.0

142.5

163.0 199.6

76.9

84.8

104.8

134.2 172.4

110.7
87.5

126.7
98.6

145.4
117.1

169.4 209.1
135.3 167.7

135.5

155.4

178.2

208.2

115.8
117.4

151.6
139.6

168.3
172.2

197.4 228.2
207.9 267.1

99.4

117.4

141.4

172.6

250.6

212.3

The per capita distribution of aid varies for several reasons. See "The Impact of Federal Aid"
section below.
2
These are not the same regions as those used for National Income Account computations. See
table N-6.
Source: "Federal Aid to States," Department of the Treasury; and "Governmental Finances
in 1970-71," Bureau of the Census. These reports provide additional information concerning
State distribution of Federal grants.

208

THE BUDGET FOR FISCAL YEAR 19 75

The decentralization of Federal management functions has focused
on standardizing the Federal field structure into a system of 10
administrative regions, and the creation of a Federal Regional Council
in each regional headquarters city. This organizational restructuring
is now permitting the increasing decentralization of authority to
Federal officials who sit on the councils. This enables State and local
officials to work more closely with Federal authorities, and facilitates
coordination among Federal agencies at the regional level. Most Federal assistance agencies now not only share common geographic
boundaries, they also have developed common services arrangements,
procedures for multiagency funding of applications, and improved
techniques for responding to the needs of States and localities on an
interagency basis.
The broader sharing of planning and management authority with
State and local governments has taken place primarily through new
programs. General Revenue Sharing contains only minimal administrative provisions, giving States and localities great latitude in making
their own spending decisions. Programs of the Environmental Protection Agency, the Occupational Safety and Health Administration,
and the Law Enforcement Assistance Administration all permit
substantial State and local input for planning, monitoring, and/or
enforcement purposes. The Administration will continue to propose
legislation and make administrative adjustments that give State and
local elected officials greater freedom in designing programs to meet
their particular needs. It will also emphasize programs aimed at
improving State and local management capabilities.
The consolidation of related Federal assistance programs is effected
through block grant and broad-based formula grant approaches and
simple elimination of duplicative and narrow categorical grants. This
budget makes significant proposals in the areas of community development, education, transportation, health, and State and local
management assistance, which complement similar initiatives in the
manpower and law enforcement areas. Each of these proposals will be
actively pursued.
The simplification of Federal administrative requirements for grants
has been carried out through issuance of governmentwide standards
and selected reductions in grant application and reporting requirements. Implementation of block and broad-based formula grant proposals will facilitate this effort as well.
It should be stressed that the New Federalism does not mean an
abdication of Federal responsibilities. New Federalism seeks to
differentiate functions best performed by central authorities from those
which ought properly to be decentralized or delegated. By permitting
each level of government-to focus attention on the functions best performed at its level—without undue interference from other levels—
the New Federalism is helping to restore a balanced federal system,
to enhance accountability to the public, and to increase governmental
efficiency.
GENERAL REVENUE SHARING

General Revenue Sharing, now in its second year, provides funds for
the States and localities with minimal restrictions and controls. The
following are the program's main features:

SPECIAL ANALYSES

209

• Predictability.—A total of $30.2 billion has been appropriated
for 5 calendar years, with the annual appropriation growing from
$5.3 billion for 1972 to $6.5 billion for 1976. States and localities
can thus plan on the basis of assured revenues.
• Minimal restrictions.—There are no program limitations on
expenditures by States and only broad guidelines for localities.
Federally imposed administrative requirements are minimal.
• Distribution.—The entitlement of each State is determined by
formulas based on population, tax effort, and per capita income.
Allocations are based on data prepared by the Department of
Commerce. No costly, time-consuming applications are required.
• Guaranteed funds for cities and counties.—Local governments
receive two-thirds of the funds allocated to each State. Distribution of funds among a State's cities and counties is determined by a formula similar to that used for distribution among
the States.
• Accountability.—State and local governments must publish plans
and publicly account for the use of revenue sharing funds.
Through January 7, 1974, $11.2 billion has been distributed. These
funds have enabled State and local governments to provide needed
services, to reduce debt burdens, and in many cases to reduce taxes.
The following table shows how funds for the first three entitlement
periods—January 1, 1972 through June 30, 1973—have been reported
as spent in the "actual use reports" required by law. As the table
indicates, recipient governments reported spending $2.7 billion, or
41%, of the $6.7 billion they had received by the end of this period.
State and local governments have 2 years from receipt of funds in
which to use them.
Table N - 4 . GENERAL REVENUE SHARING—ACTUAL
(in millions of dollars)
State governments
Category

Operating
and
maintenance

Capital

U S E REPORTS i

Local governments
Operating
and
maintenance

Capital

Education
Environment
General government
Health
Public safety
Recreation
Social services
Transportation
Other

643.0
1.3
18.5
30.0
15.1
1.4
57.5
45.5
78.6

21.3
6.1
5.9
2.7
5.0
2.3
3.7
10.1
6.4

91.2
0.0
71.4
481.4
34.4
30.6
138.4
69.9

22.9
89.3
177.8
63.9
153.9
78.9
9.2
222.9
58.9

Total

890.9

63.5

917.3

877.7

1
As provided by recipient governments. For a further evaluation of actual use expenditures,
see the forthcoming publication of the Office of Revenue Sharing, "General Revenue Sharing—
The First Actual Use Reports."
2
These categories are not precisely additive. "Local" operating and maintenance categories
are specified by law, while "State" categories are not.

540-700 O
- 74 - 14

210

THE BUDGET FOR FISCAL YEAR 1975
T H E IMPACT OF FEDERAL A I D

Federal aid has become an increasingly important factor in the
finances of all levels of government. It has risen from 9% of total
Federal outlays in 1965 to 17% in 1975, and is now 25% of budget
outlays for domestic civilian purposes. Federal aid has also increased
as a percentage of State and local governmental expenditures, growing
from 15% to 22% during the same period. These proportions are all
slightly lower in 1975 than in 1973 and 1974 because increases in
Federal payments to individuals (primarily Social Security) overwhelm
increases in other areas. Moreover, one such payment—under the
Supplemental Security Income program—ceased to be a grant program
and a State-local expenditure when the Federal Government assumed
responsibility for it on January 1, 1974.
Table N-5. IMPACT OF FEDERAL-AID OUTLAYS ON
GOVERNMENTAL EXPENDITURES
Federal aid
Fiscal year

1959._
1960
1961
1962
1963
. _ . _ _ . _ _
_ __
1964
1965
„ _ _
1966
1967
1968
1969
1970
1971
_ _ _ _ _ _ _ _
_ __
1972
1973
1974 estimate _
1975 estimate _ _ _ _ _ _ _ _ _ _ _
1
2

As a percent of—

Amount
(millions)

$6,669
7,040
7,112
7,893
8,634
10,141
10,904
12,960
15,240
18,599
20,255
23,954
29,844
35,940
43,963
48,293
51,732

Total
Federal
outlays
7.2
7.6
7.3
7.4
7.8
8.6
9.2
9.7
9.6
10.4
11.0
12.2
14.1
15.5
17.8
17.5
17.0

Domestic
Federal
outlays l
15.9
16.4
15.4
15.8
16.5
17.9
18.4
19.2
19.5
20.9
21.3
21.9
23.5
24.5
26.8
25.8
24.7

State-local
expenditures 2
13.9
13.5
12.6
13.2
13.3
14.6
14.6
15.6
16.3
18.2
17.4
18.3
19.8
21.5
23.5
23.3
22.4

Denned for this purpose as excluding outlays for defense, space, and international programs.
''Governmental Finances in 1971-72," Bureau of the Census.

The influence of Federal grants is substantially greater than the
figures alone indicate. Many grant programs are intended to encourage
innovation by State and local governments by testing and demonstrating a new concept's validity in "demonstration" programs.
Other programs unnecessarily restrict States by requiring them to
establish and maintain specific agencies, though many of these provisions are being phased out. Most importantly, many programs
require the recipient government to match Federal aid funds with
its own resources. In the last few years, State and local governments

SPECIAL ANALYSES

211

have allocated about 10% of their own revenue to match Federal
grant moneys. Broad-based formula grants reduce or eliminate
matching requirements, thereby freeing resources to be used according
to State and local priorities.
Federal aid on a per capita basis varies widely among regions, and
even among States in the same region. The thinly populated western
States traditionally rank high because of highway construction grants
and shared revenues from Federal land holdings. For example, the
Rocky Mountain region has the lowest regional population density,
extensive Federal and holdings, and the highest per capita aid.
Table N-6. PER CAPITA DISTRIBUTION OF FEDERAL AID, FISCAL YEARS
1966-73
Region i

New England
Mideast
Great Lakes
Plains
Southeast
Southwest
Rocky Mountain
Far West
United States

1966

...
2

1967

1968

1969

1970

1971

1972

1973

60.8
51.6
47.3
69.8
73.3
73.3
107.7
79.5

72.6
63.4
53.6
75.5
83.7
86.2
112.3
94.9

93.6
87.5
66.8
90.6
94.0
100.3
129.7
109.4

101.9
87.0
74.9
93.4
107.2
116.3
136.3
115.2

118.6
122.2
82.7
104.6
121.0
121.7
153.9
148.6

144.2
154.9
102.3
126.9
148.8
139.6
178.7
172.6

175.3 211.1
192.2 230.1
131.4 169.8
146.8 183.9
167.3 206.9
158.2 195.0
206.8 241.4
197.6 231.3

66.1

77.0

93.1

99.4

117.4

141.4

172.6

212.3

1
These are the same regions as those used by the Department of Commerce for National Income
Account purposes. Alaska and Hawaii, while counted in the totals, are not put into regions.
2
These are per capita figures for the entire United States, including Puerto Rico and U.S. territories, which the National Income Accounts omit.
Source: "Federal Aid to States," Department of the Treasury; and "Governmental Finances
in 1970-71," Bureau of the Census. These reports provide additional information concerning State
distribution of Federal grants.

This effect has diminished in recent years, though, as human resources programs have grown relative to physical resources programs.
Moreover, the addition of General Revenue Sharing has tended to
equalize per capita figures among the regions. The Rocky Mountain
region, which had per capita grants 60% above the national average
in 1966, now has grants only 14% over the average, while the Great
Lakes region has risen from 28% below the average to only 20% below.
In addition, an important qualitative shift has been taking place—
the increasing emphasis on urban areas. The American population is
becoming increasingly urban; today, over 70% of the population lives
in the 268 standard metropolitan statistical areas (SMSA's). About
$35.9 billion or 70% of Federal grants will be spent in or directly
affect these SMSA's in 1974. This is an increase of $21.9 billion, or
nearly 155% over the level provided to urban areas in 1969.

212

THE BUDGET FOR FISCAL YEAR 1975

Table N-7. FEDERAL-AID OUTLAYS IN SMSA 'S (in millions of dollars)
Function and program

National defense
_
Agriculture and rural development:
Donation of surplus commodities__ _. - __
Other
Natural resources and environment:
Environmental protection
Other
Commerce and transportation:
Economic development
Highways._
_ _ _
Airports.
_.
Urban mass transportation
..
Other
Community development and housing:
Funds appropriated to the President
_
Urban renewal
_ _ . _
Public housing
__
Water and sewer facilities
Model Cities
Better Communities Act
Other
Education and manpower:
Consolidated Education Grants
Elementary and secondary
_.
_ _ _
Higher education
__
.
Vocational education _
_
_._
Employment security
Comprehensive Manpower Assistance
Manpower activities
Other
_ .
Health:
Health services
_ _ _
Preventive health services
Alcohol, drug abuse, and mental health _
Health resources
__ __
Medical assistance
Other
Income security:
Rehabilitation services
Public assistance
_ __ _
Child nutrition, special milk and food stamps
Other
.
General government:
Law enforcement (including law enforcement
assistance)
National Capital region
Other
Other functions
General Revenue Sharing
._ __ .
Total aids to urban areas.. .

1964
actual

1961
actual

1969
actual

1975
estimate

.38

128
27

231
40

313
104

299
141

24
30

8
10

79
101

2,603
249

1,398
36

158
1.948
36

331
2,678
232
586

104
2,225
83
122
5

106
105

559
136
36

432
786
257
52
8

183
863
1,023
104
209
560
223

222
5
28

264
14
29

1,262
210
179

556
30
280

303

344

449

64
7

530
333

315
1,220
369
990

219

4
48

8
66

77
216
1,731

117

1,337

140
4

458
38
530
545
3,989

247

669

1,170
131
3

1,450
168
16

3,022
482
148

4,820
3,484
429

38
9

17
85
27

656
361
65
29

4,322
3,893

5,588

14,045

35,931

SPECIAL ANALYSES

213

FEDERAL STATISTICS ON AID TO STATE AND LOCAL GOVERNMENTS

The Federal Government produces three major statistical series for
Federal aid to State and local governments—the National Income
Accounts1 grants-in-aid series, the Federal payments (Census)
series, and the budget series exhibited in this special analysis. The
budget series is designed to provide a comprehensive picture of Federal
aid, focusing on programs that are financed but not directly administered by the Federal Government. The Census and NIA series are
part of broader statistical concepts encompassing the entire economy,
and as a consequence they define Federal grants somewhat more
narrowly than the budget series. They both omit the following items
which the budget series includes:
• Federal aid to the governments of Puerto Rico and U.S. territories ;
• Payments in-kind, primarily commodities purchased by the Department of Agriculture and donated to the school lunch and
other nutrition programs;
• Food stamp payments, which are similar in nature to public
assistance grants but are administered somewhat differently;
and
• Payments to private, nonprofit entities (such as manpower
training programs and nonprofit hospitals) which operate under
State auspices or within a State plan.
1

Special Analysis A of this volume contains additional information on the NIA grant series.

Table N-8. THREE MEASURES OF FEDERAL AID TO STATE AND
LOCAL GOVERNMENTS, 1965-72 (in billions of dollars)
1965

1966

1967

1968

1969

1970

1971

1972

Budget (Special Analysis N)
Less principal exclusions:
Agricultural commodities
Foodstamps
Geographical exclusions
Plus payments for research
Allother.net

10.9

13.0

15.2

18.6

20.3

24.0

—.4
-*
—.3
.8
*

—.3
-.1
—.2
.9
-.2

—.3
-.1
—.3
1.0
-.4

—.5
-.2
—.3
1.1
-.7

— .7
-.2
—.4
1.1
-.7

—.6 —.6
- . 6 -1.5
—.4 —.4
1.2
1.4
- . 4 -1.2

Federal payments (Census)
Less low-rent public housing
Allother.net

11.1
—.2
.1

13.1
—.2
-.2

15.0
—.2
-*

18.1
—.3
*

19.4
—.3
.1

23.3
—.4
-.3

27.5
—.5
-.2

Grants-in-aid (national income accounts)

10.9

12.7

14.8

17.8

19.2

22.6

26.8 32.9

*Less than $50 million.

29.8

35. 9
—.6
-1.9
—.4
1.0
-.4
33. 6
—.7
*

214

THE BUDGET FOR FISCAL YEAR 1975

The only major group of payments which the budget definition
excludes but Census and the NIA include is payments for research
conducted by public universities. The budget series excludes these
payments because they are considered to be largely a purchase of
services for the Federal Government rather than aid for State programs. Since both Census and the NIA series focus on cash payments,
they count these as grants. The one major outlay included in the
budget and Census definitions but excluded from the NIA series is payments for low-rent public housing, which the NIA count as purchases
by the Federal Government rather than as grants.
There are various other—relatively minor—differences 'n the
coverage of the three series. The series also define functions differently.
For example, coverage of the health and welfare functions differs
among the three series.
Table N-8 illustrates the differences among these series, and
demonstrates the growing divergence between the budget series and
the other two. This divergence is due primarily to the growth of the
food stamp program, which increased from $248 million in 1969 to
$1.9 billion in 1972. The expected expansion of this program to $3.9
billion in 1975 will result in an even greater divergence in the future.
Table N-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i
(outlays in millions of dollars)
Agency and program

Functional
code

National defense:
Department of Defense— Military:
Civil defense shelters and financial assistance
Construction of Army National Guard centers
Atomic Energy Commission
Other

1973
actual

051
051
058
059

32. 3
10.0
5.4
4.4

32. 7
10.0
7.2
3.5

61.8

52.1

53.4

6. 3

1.2
1.1

7.4
1.1

___

6.3

8.3

8.5

351
352
352
352
354
355
355
355
352

973. 5
42.0
1.5
4.1
8. 2
29.3
158.2
80. 0

1,079. 9
51.6
3.0
3.0
15. 7
31.1
172.4
87. 4
1.0

499. 0
37. 7
5.5
1.7
9. 5
32.6
175.0
93. 3
6.0

1,296.9

1,445.0

860.2

International affairs and finance:
Department of State:
East-West Cultural ana Technical Interchange Center. 153
International Center, Washington, D,C
151 ___

Agriculture and rural development:
Department of Agriculture: Agricultural Marketing
Service and Commodity Credit Corporation
Rural water and waste disposal facilities
Mutual and self-help housing
Rural housing for domestic farm labor
Resource conservation and development
Consumer protective programs
Cooperative agricultural extension service
Cooperative State Research Service
Rural Development
Total, agriculture and rural development
See footnotes at end of table.

1975
estimate

27. 5
25. 8
5.2
3.2

Total, national defense

Total, international affairs and finance

1974
estimate

SPECIAL ANALYSES

215

Table N-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i—Con.
(outlays in millions of dollars)
Agency and program

Natural resources and environment:
Department of Agriculture:
Watershed protection and flood prevention
Grants for forest protection and utilization
National forest and grassland funds: payments to
States and counties (shared revenue)
Assistance to States for tree planting
Department of Defense—Civil: Corps of Engineers:
Payments to States, Flood Control Act of 1954
(shared revenue)
Department of the Interior:
Payments to States and counties (shared revenue) __
Bureau of Reclamation
Mine drainage and solid waste disposal
Fish and wildlife restoration and management
Outdoor recreational areas (Land and Water Conservation Fund)
Preservation of historic properties
Office of Water Resources Research
Land use planning
Federal Power Commission: Payments to States
(shared revenue)
Tennessee Valley Authority: Payments in lieu of taxes
(shared revenue)
Water Resources Council
Environmental Protection Agency__

Functional
code

Total, commerce and transportation
See footnotes at end of table.

1974
estimate

1975
estimate

401
402

78.5
24.9

119.7
26.3

101.1
27.1

402
402

85.6
.7

114.6
.7

102.1
.8

401

3.0

402
401
403
405

96.0
1.6
58.1

103.9
2.9
.2
66.5

118.9
1.1
.2
70.6

405
405
401
402

107.3
4.0
8.3

160.0
6.3
8.2

160.0
9.3
7.6
37.2

401

401
401
401

27.3
2.9
745.1

31.1
3.4
2,085.2

39.2
2.2
3,470.9

1,243.3

2,732.1

4,151.3

507
507

155.9
260.1

200.0
291.1

164.0
327.9

502
507
506
506
507
507

.5
38.4
2.2
26. 3
193. 8
10.5

503
503
503
503
503
501
___
___

Total, natural resources and environment
Commerce and transportation:
Funds appropriated to the President:
Disaster Relief
Appalachian development
Department of Commerce:
State marine schools
Regional development
Minority Business Enterprise
National Oceanic and Atmospheric Administration._
Economic development assistance
Department of the Interior: Indian programs
Department of Transportation:
Forest and public lands highways
Highway beautification
Highway safety
__
Federal-aid highways (trust fund)
Urban mass transportation facilities
Federal aid for airports and airways (trust fund)
Other

1973
actual

38.3
28.6
192.3
14.2

36.2
25.5
31.6
218.1
40.7

33.8
16.0
76.7
4,604.5
290. 7
232. 3
19.4

15.9
46.0
108.4
4,399.5
405.4
234.0
32.1

13.3
44.3
113.3
4,570.4
588.9
290.0
38.1

5,961.1

6,009.2

6,502. 7

3.0

216

THE BUDGET FOR FISCAL YEAR

1975

Table N-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i—Con.
(outlays in millions of dollars)
Agency and program

Community development and housing:
Funds appropriated to the President
Department of Housing and Urban Development:
Model city grants
Urban renewal
Open space land and urban beautification
Grants for basic water and sewer facilities
Grants for neighborhood facilities
Communi ty Planning and Management
Low-rent public housing programs
Legal Services Corporation
Better Communities Act
Total, community development and housing
Education and manpower:
Funds appropriated to the President
Department of Health, Education, and Welfare:
Office of Child Development
Elementary and secondary education
Consolidated education grants
Assistance to schools in federally affected areas
Education of the handicapped
Indian education
__.
Higher education activities
(Portion to private institutions)
Vocational education
Libraries and community services
Educational development
Work incentive activities
Emergency school assistance
Department of Labor:
Comprehensive rr anpower assistance
Grants for employment services
Occupational safety
Grants to States for administration of employment
security and training programs (trust fund)
Emergency employment assistance
Department of Interior: Bureau of Indian Affairs:
Education and welfare services
National Foundation on the Arts and the HumanitiesCorporation for Public Broadcasting
Equal Employment Opportunities Commission
Other
Total, education and manpower
Health:
Department of Health, Education, and Welfare:
Health services
Center for disease control
Health resources
(Portion to private, nonprofit institutions)
Alcohol, drug abuse, and mental health
Medical assistance
Total, health
See footnotes at end of table.

Functional
code

1973
actual

1974
estimate

1975
estimate

551

676. 4

589.4

226. 5

551
551
551
551
551
551
555
551
551

586.2
1.010.3
61.4
156.5
26.6
76.9
1.052.6

586.4
1.150.0
69.2
160.0
35.0
112.0
1.176.4

220.0
1,150.0
70.0
160.0
35.0
125.3
1.363.2
31.5
560.0

_ __

3,646.9

3,878.4

3,941. 5

601

10. 6

601
601
604
601
601
601
602
__.
603
605
605
607
601

372.8
1,819.1

399.3
2,061.6
485.5
35.5
16.1
90.6
(21.0)
573.8
201.1
194.3
291.7
190.3

426.0
683.3
1,910.4
416.3
16.3
38.8
47.0
(13.0)
318.4
122.9
133.5
297.2
230.4

607
607
609

987.2
63.6

3.7

1,054.6
64.4
31.7

1,626.8
64.4
44.0

607
607

362.6
1,002.2

379.4
617.3

380.0

601
608
605
609
___

23.3

6.5

8.3

35.0

50.0

23.9
14.6
60.0

1.3
18.6

2.1
4.8

3.0
2.0

___

6,554.5

6,775.8

6,859.2

651
652

548.8
46.2
455.1
(99.3)
319.0
4,599.8

623.2
65.9
581.5
(111.2)
444.3
5,827.0

654.3
53.7
762.9
(139.2)
602.1
6,508.0

...

5,968.9

7,541.9

8,544.9

652
653
651

518.5
39.6
187.4
(43.8)
591.5
84.7
120.3
266.0
40.5

SPECIAL ANALYSES

217

Table N-9. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i—Con.
(outlays in millions of dollars)
Agency and program

Income security:
Department of Health, Education, and Welfare:
Income maintenance payments
Social services for welfare recipients
Rehabilitation and other services
Department of Agriculture:
Foodstamp
Child nutrition program and special milk
Department of Labor:
Retirement and social insurance (trust fund)
Total, income security

Functional
code

General government:
Department of the Interior:
Grants to territories
Internal revenue collections, Virgin Islands (shared
revenue)
Department of Justice: Law enforcement assistance
Treasury Department: Tax collections for Puerto Rico
(shared revenue)
National Capital region:
Federal Payment to District of Columbia
Washington Metropolitan Transit Agency
Other
Total general government
General revenue sharing
Total, grants and shared revenues

1974
estimate

1975
estimate

703
703
704

5,921. 7
1,612.9
664.9

5,346.5
1, 785.5
865.1

4,347.5
2,078.5
973.8

703
703

2,160.7
685.3

2,931.9
904.5

3,856.9
1,376. 3

702

451.6

438.0

465.4

...

11,497.1

12,271.5

13,098.4

17.2
2.6
.7

32.7
5.8
1.0
7.7

25.5
5.5
1.3
13.8

Veterans benefits and services:
Veterans Administration:
Aid to State homes
804
Grants for construction of State nursing homes
804
Administrative expenses
804
Assistance for health manpower training institutions. 804
Total, veterans benefits and services

1973
actual

___

20.5

47.2

46.1

910

76.7

82.7

81.4

910
908

22.4
526.3

16.7
707. 7

22.4
747.2

910

109.5

116.0

909
909
._.

181.5
75.8
76.8

190.0
182.9
88.5

231.5
184.4
108.6

1,069.0

1,384.5

1,491.5

___
940

6,636.4

_. _

43,962.5

6,147.2

6,173.8

48,293.0 51, 731. 5

*Less than $50 thousand.
Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table N-10.
Spend-out from prior year budget authority.

1
2

218

THE BUDGET FOR FISCAL YEAR

1975

Table N-10. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars)
Agency and program

Disbursements
1973
actual

Net outlays

1974
1975
estimate estimate

1973
actual

1974
1975
estimate estimate

Natural resources:

Department of the Interior: Reclamation loans
Total, natural resources

17.7

14.1

13.0

17.7

14.1

13.0

17.7

14.1

13.0

17.7

14.1

13.0

Commerce and transportation:
Department of Commerce: Economic
development assistance
Department of Transportation:
Mass transportation facilities
Right-of-way revolving fund

7.1

11.6

6.4

7.1

11.6

6.4

38.0
24.9

50.2

46.0

38.8
24.9

—.2
50.2

—.2
46.0

Total commerce and transportation

70.0

61.8

52.4

69.9

61.6

52.2

625.5

700.0

650.0

-14.9

-1.6
-1.0
807.9 1,038.0

-.8
845.4

-5.5
-10.5

-5.4
-4.5

-5.2
-26.0

Total, community development
and housing
1,431.8 1,737.0

1,494.6

-31.0

-9.8

-31.2

Community development and housing:

Department of Housing and Urban
Development:
Low-rent public housing fund
Housing management: Revolving
fund
Community development

Education and manpower:

Department of Health, Education,
and Welfare:
Higher education activities
Medical facilities
Department of Housing and Urban
Development: College housing....

2.9
5.1

4.9
53.5

5.6
20.0

—.4
5.1

1.3
1.6
13.5 - 1 8 . 6

24.1

12.0

8.0

1.5

-12.2 -18.2

Total, education and manpower.

32.1

70.4

33.6

6.2

2.6

—35.2

Department of the Interior: Administration of territories
District of Columbia

3.9
175.5

2.9
270.1

3.8
253.2

3.9
175.5

2.9
270.1

3.8
253.2

Total, general government

179.4

273.1

257.0

179.4

273.1

257.0

1,731.0 2,156.4 1,850.6

242.1

341.6

255.8

General government:

Total

SPECIAL ANALYSIS O
FEDERAL RESEARCH AND DEVELOPMENT PROGRAMS

Federal funds for research and development will increase by 9%
from 1974 to 1975 reflecting recognition of the larger potential contribution of science and technology to the solution of critical national
problems. This is particularly true in the case of energy, where the
1975 budget reflects a substantial increase in research and development.
In addition to energy, the 1975 funds provide for the research and
development needed to:
—maintain the deterrent capabilities of strategic military forces
and improve the readiness and combat capabilities of general
purpose forces;
—maintain a balanced space program that advances space science
and the practical application of space technology; and
—respond to other pressing societal needs such as health, transportation, environment, natural hazards, drug abuse, and crime
prevention.
Estimated Federal obligations for the conduct of research and
development are shown in table 0—1. Total obligations will increase
by $1.9 billion to $19.8 billion. Civilian research and development
will increase by 2 1 % in 1975. Defense research and development obligations will increase by about 10%. Space related research and development will continue close to the 1974 funding level.
Table 0 - 1 . THE OVERALL FEDERAL R. & D . OUTLOOK
(obligations for conduct of R. & D. in billions of dollars)
1973
actual
Defense, including AEC military related programs
Space program *
Civilian programs
Total

1974
estimate

1975
estimate

9.0
2.6
5.2

9.3
2.8
5.8

10.2
2.6
7.0

16.8

17.9

19.8

Includes all NASA programs except those dealing with aeronautical research, communications
and environmental satellites, earth observations, and technology utilization which are included
under civilian programs.

219

220

THE BUDGET FOR FISCAL YEAR

1975

The long-term trends of the Federal research and development
(R. & D.) effort is shown in the following chart.
Conduct of Research and Development— Obli3ations
$ Billions

$ Billions

Defen
^

•

8 —

sP
4 —

1966

1967

Fiscal Y e a n

1968

1969

1970 1971

1972

1973

1974

J975

Estimate

Federal funds for research and development in the 1975 budget
reflect an investment on priority national needs, ranging from national
defense to energy to cures for diseases. Attention also is being directed
toward a balanced program of research and development which not
only emphasizes short-term needs but also invests in areas of longer
term importance such as basic research. This balance particularly
recognizes a reluctance of industry to support basic research where
benefits are not easily capturable by individual companies. Therefore,
support by the Federal Government is particularly important in such
areas of research.
There continues to be a growing awareness among Federal agencies
that the effectiveness of an R. & D. program is often limited by institutional barriers to utilizing the results of R. & D. Thus, increased
attention is being devoted by a number of agencies—including Agriculture; Health, Education, and Welfare; Environmental Protection
Agency; National Science Foundation; and the Department of Commerce—to efforts which speed up the utilization of federally sponsored
research and technology.
Non-Federal investment in R. & D. in 1975 is estimated to be about
$16 billion or 45% of the total national investment of about $36 billion
for the year. The partnership between the Federal Government and

SPECIAL ANALYSES

221

industry, State and local government, and other investors in science
and technology is an important one. It has contributed to a vigorous
economy through agricultural and industrial productivity, to national
security, and to some of mankind's greatest scientific and technological
achievements such as the exploration of the Moon and the abolition
of many diseases. The 1975 Federal budget recognizes that difficult
challenges facing the American people require the continued partnership of the Federal and other public and private sector programs in
research and development.
AGENCY RESEARCH AND DEVELOPMENT PROGRAMS
More than 99% of research and development activities of the
Federal Government are performed by 13 major departments or
agencies. The following table (0-2) summarizes both obligations and
expenditures for conduct of research and development by these
agencies. Only a part of the budget increase for new energy R. & D.
initiatives is reflected in the budget of the Federal departments and
agencies shown in the analysis that follows. An additional $777 million
in obligations and $461 million in expenditures for acceleration of
energy research and development and related activities (included in
table 0-1 and in the long-term trends shown in the chart) do not
appear in any of the tables that follow. The additional funding will be
the subject of a later separate submission amending the 1975 budget.
Table 0-2. CONDUCT OF RESEARCH AND DEVELOPMENT
(in millions of dollars)
Obligations
Department or agency

Defense—Military functions
National Aeronautics and Space Administration
Health, Education, and Welfare
Atomic Energy Commission
National Science Foundation
Transportation
Agriculture
Interior
Commerce
Environmental Protection Agency
Veterans Administration
Housing and Urban Development
Justice
All other
Total, conduct of research and
development 1
Total, conduct of research
Total, conduct of development
1

1973
actual

Expenditures

1974
estimate

1975
estimate

1973
actual

8,382

8,573

9,581

8,417

8,676

9,201

3,085
1,844
1,361
480
311
371
254
191
181
74
58
35
176

3,309
2,332
1,429
530
358
393
287
210
174
85
65
52
132

3,122
2,228
1,586
549
396
412
345
266
150
94
70
56
128

3,271
1,791
1,361
428
312
349
235
179
145
75
48
24
150

3,104
2,191
1,429
460
342
389
282
192
180
85
58
46
151

3,173
2,354
1,586
498
364
416
317
233
186
94
67
56
125

16,802

17,930

18,934

16,784

17,585

18,669

6,478

7,287

7,325

6,428

6,971

7,333

10,324

10,643

11,660

10,356

10,613

11,335

Details in this and other tables may not add to totals due to rounding.

O - 74 - 15
540-700

1974
1975
estimate estimate

222

THE BUDGET FOR FISCAL YEAR

1975

Table 0-3 identifies funding by major agency for new construction
or renovation of research and development facilities and for the
acquisition of major items of equipment. Funding for facilities generally parallels program levels for the conduct of research and development but the acquisition of individual large facilities may cause the
overall obligations and expenditures for this purpose to fluctuate more
markedly. For example, completion of the funding of the Environmental Protection Agency research laboratory in Cincinnati, Ohio, in
1974 accounts for a drop in obligations to zero in 1975 for that agency.
Table 0-3. RESEARCH AND DEVELOPMENT FACILITIES (in millions of dollars) 1
Obligations
Department or agency

Atomic Energy Commission
Defense—Military functions
National Aeronautics and Space Administration
Transportation
National Science Foundation
Health, Education, and Welfare
Interior
Commerce
Envii onmental Protection Agency
Agriculture
All other
Total, facilities

1973
ctual

1974
estimate

Expenditures
1975
estimate

1973
actual

1974
1975
estimate estimate

349
146

387
21
0

41
1
19
8

262
17
5

385
15
7

432
18
6

69
38
57
43
26
8
23
3
15

12
3
32
39
7
1
88
1
2
1
3
1
1
24

16
5
20
49
33
55
1
1
8
25

45
25
43
49
1
6
6
3
9
1
0

75
30
43
72
53
1
0
9
1
0
11

12
0
22
50
80
49
1
2
1
6
1
0
32

776

1,010

958

624

894

974

1
Does not include 1975 estimates for all additional facilities related to the accelerated energy
research and development program.

In the sections that follow the thrust and content of the R. & D.
programs, including facilities, of each of the major agencies are
discussed.
DEPARTMENT OF DEFENSE—MILITARY

Department of Defense obligations for research and development,
including construction of R. & D. facilities and the cost of associated
military personnel, will increase by $996 million over the 1974 level
(which includes a supplemental request of $103 million) reaching a
total of $9,770 million. Obligations for the conduct of research will
increase by $75 million to a level of $1,862 million. Obligations for
development programs and for the operation of test and evaluation
facilities will increase by $934 million to a level of $7,720 million.
Both the 1974 supplemental and 1975 budget request provides for
acceleration of R. & D. effort to exploit lessons learned from the recent
Mideast conflict and increase force readiness, particularly in the areas
of air defense suppression, combat mobility, weapons delivery, and
ship defense against missiles and other weapons. In 1975, there are
significant increases to improve both strategic and tactical force
capabilities and to strengthen underlying technology efforts.

SPECIAL ANALYSES

223

In the strategic area, the Trident submarine and missile system, and
the B-l advanced manned strategic bomber both receive increased
support. In addition, a number of programs will be initiated to give
the United States the option to produce new and more capable
strategic systems, should they be required. These include more
accurate missile guidance systems, higher yield warheads, and a new
standoff cruise missile for air launched delivery. Efforts will begin
on a small-size strategic submarine. Later decisions to produce and
deploy these weapons will depend on the outcome of ongoing SALT
negotiations.
Major tactical systems receiving increases include the Aegis antimissile fleet defense system for the protection of carrier forces against missile attacks, the Airborne Warning and Control System to improve the
command, control, and warning capabilities of our tactical air forces,
and a new attack helicopter and tank to improve our ground capabilities. The Air Force will enter engineering development of a new
combat fighter and the Navy will initiate a new fighter program.
These fighter aircraft programs will provide lower cost alternatives
for the modernization of tactical air forces.
Increases will also be provided for key technologies that are essential
for the development of more capable and efficient military systems
and that will allow quick response to changing threats. Lasers, guidance technology, and reconnaissance technology are examples.
The Department of Defense will continue to pursue management
approaches such as design-to-cost aimed at increasing the efficiency
and effectiveness of its R. & D. effort.
Table 0-4. DEPARTMENT OF DEFENSE—MILITARY RESEARCH AND
DEVELOPMENT (in millions of dollars)
1973
actual

Conduct of research and development:
Research, development, test, and evaluation:
Military sciences
__
Aircraft and related equipment
_ _
Missiles and related equipment
__
Military astronautics and related equipment-.
Ships, small craft, and related equipment
_
Ordnance, combat vehicles, and related equipment- _
Other equipment
Programwide management and support
_ _
Other appropriations

_
__

Total, conduct of research and development, obligations.
Total, conduct of research, included above
Total, conduct of development, included above
Research and development facilities, obligations
Total obligations

_ _

1974
estimate

1975
estimate

592
411

431
1,832
2,340
525
726
512
2,090
712
413

8,382

8,573

9,581

1,750
6,632
146

1,787
6,786

201

1,862
7,720
189

8,528

8,774

9,770

457
1,881
2,141
421
634
381
1,548
525
394

426
1,658
2,112

594
633
460
1,687

224

THE BUDGET FOR FISCAL YEAR 19 75
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

The 1975 NASA budget—which is classified entirely as research and
development—provides for a continuing balanced effort among programs in manned space flight, space science, applications, and aeronautics. The decrease in obligations in 1975, in some areas, compared
with those in 1974, represents delayed obligations of 1973 budget
authority in 1974.
The funds in the NASA budget for 1975 are tied to the support of a
number of near and longer term space projects. Following the Skylab
experimental space station in 1974, the next mission in manned space
flight will be the Apollo-Soyuz test project to rendezvous and dock
U.S. and U.S.S.K. spacecraft in 1975. The Space Shuttle will be
developed through the 1970's. It will greatly enhance the flexibility
and reduce the cost of space operations by permitting recovery of
satellites for refurbishment and reuse, repair of satellites in-orbit, and
reuse of launch vehicles.
The main thrust in the space sciences program will be the exploration of the solar system with the two Viking unmanned orbiter/
lander spacecraft scheduled for launch to Mars in 1975 and two
Mariner spacecraft for the Jupiter-Saturn flyby mission scheduled
for launch in 1977. A Pioneer spacecraft recently completed the
photographic examination of Jupiter in a flyby of that planet, and
another is en route. A spacecraft is on the way to Venus and Mercury;
and Venus orbiters and probes are being initiated. Development will
continue on the Orbiting Solar Observatory to study the sun and on
the High Energy Astronomy Observatory to study celestial X-ray
and gamma-ray sources and cosmic rays.
In the space applications program research and development will
continue on a new generation of weather satellites to provide major
improvements in weather forecasting. A satellite to demonstrate
techniques of monitoring the earth's pollution from space will be
developed. In addition, the survey of the earth's resources (e.g., water
and land use) will continue with the launch and operation of the
second Earth Resources Technology wSatellite. Two new missions in
the applications program are being initiated in 1975. One mission will
locate geothermal sites which are potential sources of energy, and the
other mission will study the oceans from space.
Aeronautical research and technology will emphasize ways to
reduce engine noise of existing aircraft and to improve the performance, reduce the energy requirements, and mitigate undesirable environmental effects of civil and military aircraft. Work is in progress on
clean, quiet, efficient propulsion systems for short takeoff and landing
aircraft. Similar technological advances are being pursued on conventional takeoff and landing aircraft including current narrowbody civil jet transports.

SPECIAL ANALYSES

225

Table 0-5. NATIONAL AERONAUTICS AND SPACE ADMINISTRATIONRESEARCH AND DEVELOPMENT (in millions of dollars)
1973
actual

Conduct of research and development:
Manned space flight
Space sciences
Space applications
Space and nuclear research and technology
Aeronautical research and technology
Supporting activities
Research and program management
Total, conduct of research and development, budget plan _

Research and development facilities, budget plan
Total, research and development, budget plan
Total, research and development, obligations

1974
estimate

1975
estimate

1,136
662
205
82
11
5
252
111

1,056
588
15
7
69
18
6
249

75
4

70
5

3,210
7
9

3,050
11
0

3,096

3,289
3,154

3,151
3,442

3,247
3,278

1,125
540
14
8
7
5
16
6
256

11
5

HEALTH, EDUCATION, AND WELFARE

The Federal Government remains the principal source of financial
support for biomedical research in the United States, providing almost
two-thirds of all the research funds. The largest single agency supporting medical research is the Department of Health, Education, and
Welfare (HEW) through the National Institutes of Health (NTH).
Biomedical research and development supported by NIH will
continue the trend of the last several years. Expenditures for 1975 will
increase by $140 million from $1,643 million in 1974 to $1,783 million
in 1975. The funds will support research into diseases affecting human
health, including cancer, heart and lung diseases, sickle cell anemia,
aging, and venereal disease. Preventive health care research is being
pursued through investigation into infant and child health, new
approaches to drug treatment, new pharmacological agents for the
treatment and prevention of addiction and on the general epidemiology
of the drug problem; new ways to treat, control, and prevent alcoholism and alcohol abuse; basic and chemical research on the multiple
causes of alcoholism; and development of new knowledge and approaches to the causes, diagnosis, treatment and prevention of mental
illness.
Additional preventive health care research and development is
being pursued through funding of demonstrations of health maintenance organizations, family planning, and emergency medical systems.
Social services research will investigate the causes and possible
means of remedying poverty, the results of various income main-

226

THE BUDGET FOR FISCAL YEAR

19 75

tenance efforts, redistributive effects of social security benefits, and
the effects of various methods of health insurance financing on economic security. Research on vocational education and education for
the handicapped is being pursued by the Office of Education, white
under the National Institute of Education, research endeavors involve
learning for the disadvantaged, reading career education, educational
technology, alternative financing for education (education vouchers),
and experimental schools. Table 0-6 exhibits the departmental expenditures by agency, and reflects a recent reorganization within
HEW.
While the program level of R. & D. in the Department, particularly
for the NIH, appears to decline from 1974 as reflected in the lower
level of obligations in 1975, the 1974 obligations represent, in part,
delayed obligation of 1973 budget authority. Expenditures—which
reflect the actual impact of Federal research funding—rise markedly
from 1974 to 1975.
Table 0-6. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARERESEARCH AND DEVELOPMENT (in millions of dollars)
Obligations
1973
actual

Conduct of research and development:
National Institutes of Health. _.
Alcohol, Drug Abuse, and Mental
Health Administration
National Institute of Education, _
Health Resources AdministrationOffice of Education
Social and Rehabilitation Service.
Food and Drug Administration...
Center for Disease Control
Social Security Administration
Office of the Secretary
Assistant Secretary for Human
Development
Health Services Administration.__
Assistant Secretary for Health
Total, research and development

1974
estimate

Expenditures
1975
estimate

1973
actual

1974
estimate

1975
estimate

1,338

1, 745

1, 662

1,327

1,643

1,783

122
107
53
58
53
30
33
18

157
101
61
55
50
35
38
25
21

19
2
10
3
7
1
2
15
i 33
38
34
27
134

12
1
36
5
1
94
63
23
34
1
8

12
3
96
48
6
1
66
33
37
25
1
5

12
3
14
1
63
2
51

12
12
8

15
12
16

*24
1
2
1
8

9
1
2
1
1

1
2
1
3
1
1

1,844

2,332

1,791

2,191

2,354

2,228

M7
38
32
27
1
23
1
3
1
4

1
Reflects the transfer of certain research functions from the Social and Rehabilitation Service to
the Assistant Secretary for Human Development and the Office of the Secretary.
2
Reflects the transfer of certain research functions to revenue sharing account*.

SPECIAL ANALYSES

227

ATOMIC ENERGY COMMISSION

Research and development by the Atomic Energy Commission will
increase from $1,429 million in 1974 to $1,586 million in 1975. Obligations for related construction and equipment will total $411 million
in 1975, as compared to $387 million in 1974. The additional funds,
in the main, will be used to accelerate energy research in response to
the pressing energy needs of the Nation. Further increases from funds
for acceleration of the Federal energy R. & D. effort will further
augment the total AEC program in 1975.
AEC's top priority civilian program continues to be the development of an economic Liquid Metal Fast Breeder Reactor (LMFBR).
This program will be strengthened in 1975. On July 25, 1973, AEC
entered into contracts with Commonwealth Edison Co. of Chicago, the
Tennessee Valley Authority, and two not-for-profit corporations, the
Breeder Reactor Corp. and the Project Management Corp. for a
cooperative endeavor to design, construct, and operate the Nation's
first demonstration LMFBR power plant. Funds for the development of the High Temperature Gas Reactor will also be increased and
R. & D. will be continued on the Light Water Breeder Reactor, the
Gas Cooled Fast Breeder Reactor, and the Molten Salt Breeder
Reactor.
Increased emphasis will be placed on the controlled thermonuclear
fusion research program. It seeks to develop a new energy source
based on the nuclear fusion process that may provide a basis for a
long range solution to the Nation's energy problem.
AEC's research program includes investigations in the physical
sciences to develop a fundamental understanding of the properties
and behavior of both matter and energy; studies in the biomedical
and environmental sciences of the effects of energy production on
living systems in order to assess, evaluate, and control environment;
and research related to weapons technology and detection techniques.
AEC's development programs include design and testing of nuclear
weapons, process development in support of nuclear material production activities, development of techniques and facilities for long-term
storage of radioactive wastes, and the development of advanced
reactors for power and propulsion.
The AEC budget for construction of research and development
facilities in 1975 provides for obligations of $266 million, which is
$15 million more than the 1974 level. Included in the 1975 amount
is $132 million for continued construction of the Fast Flux Test
Facility in support of the LMFBR program; $12 million for completion of construction of a facility for development and testing of a
new prototype nuclear propulsion plant in support of the naval reactor
program; and $8 million for construction of heavy ion facilities to
support research under the physical research program.

228

THE BUDGET FOR FISCAL YEAR 1975
Table 0-7. ATOMIC ENERGY COMMISSION—RESEARCH AND
DEVELOPMENT * (obligations in millions of dollars)
1973

1974

1975

Conduct of research and development:
National security:
Weapons research
Weapons development and testing
Naval reactor development
Waste management

6
1
394
19
4
6

58
383
14
5
1
2

59
393
162
1
7

Total, national security

610

607

61
3

256
37
33
10
9
34

290
53
40
1
5
9
4
1

350
82
44
12
12
48

379

448

548

21
4
93
39

250
98
26

268
112
27

373

374

407

1,362

1,429

1,586

348

387

41
1

1, 710

1, 816

1, 997

Energy:
Reactor research and development
Controlled thermonuclear research
Nuclear materials (production)
Applied energy technology
Other programs
Reactor safety research
Total, energy
Physical research
Biomedical and environmental research.
Space nuclear systems

Total, conduct of research and development

Research and development facilities
Total, research and development

1
Does not include added funds for research and development or facilities, that are part of the
funds for further acceleration of the Federal energy R. & D. effort.

NATIONAL SCIENCE FOUNDATION

National Science Foundation obligations for research and development and related facilities will increase from $569 in 1974 to $598
in 1975. These increases reflect the Administration's support for scientific research to provide the fundamental knowledge necessary for
economic growth and long-range solutions of problems of national
concern. The main problem areas addressed by much of the NSF
research include energy, environment and productivity.
In 1975, NSF will expand significantly its support for energy
related research as a part of the President's accelerated program of
energy R. & D. Further increases for acceleration of the Federal
energy E. & D. effort will augment the total NSF energy program in

SPECIAL ANALYSES

229

1975. The NSF will strengthen its funding of fundamental research
to provide better understanding of a wide range of energy problems
leading to the development of new materials, techniques, and processes
for energy systems. Basic and applied studies in solar and geothermal
energy will result in the near future in the design and testing of systems
for heating and cooling buildings and for commercial utilization of
geothermaT energy. Selected advanced research will be pursued on
unconventional energy sources and alternative energy systems, e.g.,
photovoltaic and bioconversion systems.
Support of fundamental research will increase by $34 million to
$325 million. This research—though broadly based—will emphasize
such areas as catalysis, industrial processes, biological pest control,
plate tectonics, and atmospheric physics. Under its support of major
research facilities, the Foundation will provide $13 million for accelerated construction of the Very Large Array radio astronomy facility
begun in 1973.
In addition to the substantial energy program, the Research Applied to National Needs Program will continue its efforts in environmental systems, earthquake engineering, technology assessment and
improving productivity in industry and the public sector.
Under its national programs the Foundation provides the management capability for operating large national facilities such as the
National Center for Atmospheric Research and the academic oceanographic fleet as well as organizing and managing large research programs, such as the International Decade of Ocean Exploration or the
Antarctic Research Program. These national programs will continue
to emphasize environmental research (earth, atmospheric and ocean
sciences) to improve our knowledge of how to better manage the
environment.
DEPARTMENT OF TRANSPORTATION

The research and development obligations for the Department of
Transportation, including facilities, have grown rapidly from $130
million in 1969 to $390 million in 1974 and are projected at $417
million for 1975.
The obligation level for 1975 provides funding for maintaining the
thrust of transportation research to solve the near term transportation
problems facing the Nation, as well as providing funding for technology development which may be needed for future transportation
systems. Transportation alternatives are being better defined and
tradeoffs are being evaluated so that our near-term problems of energy
conservation, urban mobility, environmental protection and improved
safety will receive urgently needed emphasis and attention.
Urban mass transportation R. & D. in 1975 will emphasize the
development of improved higher capacity, quieter, and low pollution
transit buses, the development of advanced personal rapid transit
(PRT) systems, and the continuation of the mtermodal integration
program designed to encourage low-cost service innovations and
regulatory actions to improve and maximize the use of current urban
transportation systems.

230

THE BUDGET FOR FISCAL YEAR 19 75

Highway research funding will continue to strengthen cooperative
programs with State governments to increase highway and pedestrian
safety, reduce the high costs of highway construction and maintenance,
and increase the capacity of highways and roadways through improved
traffic management techniques. Highway traffic safety research in
1975 will emphasize accident investigation and data analysis, vehicle
safety, biomechanics research, and alcohol countermeasures.
Kailroad research will emphasize the solution of industry cost and
freight car management problems, improved freight service, and rail
safety, including tank car improvements.
Air transportation research provides for continued upgrading of the
air traffic control system and for increasing airport and airway
capacity through improved surveillance, communication and landing
aid development, and increased automation of the air traffic function.
Also emphasized are aviation safety, aircraft noise and pollution
abatement activities, the development of ground-based systems to
improve the precision navigation of aircraft, and other air safety
research.
R. & D. in the Coast Guard in 1975 will continue to stress maritime
pollution control systems development, all weather harbor traffic
monitoring, improved aids to navigation, and programs to improve
public safety at sea including recreation boating.
DEPARTMENT OF AGRICULTURE

Obligations of the Department of Agriculture for the conduct of
research and development will increase from $393 million in 1974 to
$412 million in 1975.
Developments during the past year in the supply and demand situation for food highlight the need for research to support the production
of ample supplies of high quality food and fiber to be marketed at
prices consumers can afford to pay. Efficiency in the use of energy
must be met in agriculture as well as in other industries. New funds
for 1975 will focus on developing new knowledge and technology for
reducing the production costs of red meats; increasing productivity
of oilseeds—especially soybeans; reducing the costs of producing
wheat, feed grains and milk; and minimizing crop losses from disease,
insect and environmental stresses—especially from the standpoint of
vulnerability associated with narrow genetic bases in most of our major
crop varieties.
Increased attention will be given to research on the nutrient composition of our foods and the nutrition status and requirements of the
American public.
Improved environmental quality in rural America will be further
pursued through increased research on the control of water erosion
and sedimentation and other facets of agricultural-related pollution.
New studies on nitrogen nutrition of crops will seek to serve the dual
objective of improved efficiency of fertilizer and naturally available
nitrogen and decreased potential for water pollution.

SPECIAL ANALYSES

231

The Department of Agriculture and cooperating State and private
research organizations will reassess their programs during 1975 to
insure that the United States has the research base for agricultural
preeminence. In addition, new efforts will be made to improve our
ability to forecast agricultural trends to aid in production, marketing,
and price setting decisions. This will include more detailed and complete cattle and swine surveys and new means for drawing upon data
from satellites and other means of remote sensing to survey crop and
natural resource conditions and supplies.
DEPARTMENT OF THE INTERIOR

The Department of Interior undertakes research and development
involving mineral, land, water, fish, and wildlife resources, as well as
geological and energy research and development. Obligations for the
Department of Interior for research and development will show an
increase from $287 million in 1974 to $345 million in 1975. The 1975
amount will be further increased by funds for acceleration of the
Federal energy R. & D. effort and will augment the total Department
of the Interior's energy program this year.
The Department is accelerating its programs for current land-use
mapping in order to speed completion of its long-standing program
of mapping the United States at a scale of 1: 24,000. It is also accelerating its geological and geophysical evaluation and classification
studies of the outer continental shelf and of coal lands in preparation
for advanced leasing schedules. The Department is actively pursuing
the development of safe mining systems that will at the same time
permit maximum recovery of the useful minerals. Programs in metallurgy and ceramics emphasize more efficient processing of raw materials, the derivation of energy from waste materials, and the development of high-temperature, corrosion-resistant materials. Together
with the Department of Agriculture, Interior will continue demonstration programs in strip mine restoration in 1975.
Land and water resource studies involve investigations into landuse problems, efforts to improve the quality of the physical environment, and the promotion of efficient allocation and conservation of
scarce water and water-related resources. Research programs will be
continued to better understand basic principles of hydrology necessary
for the appraisal and evaluation of the Nation's water resources, including the effects of underground waste storage. Other research programs include application of environmental resource data in urban
decisionmaking processes; and the application of satellite-acquired
data in the earth sciences to land and water resource management.
Basic and applied research on principles and processes related to
geologic hazards such as land slides and earthquakes will continue.
The Department's program is enlarged as a result of the consolidation
of Commerce's earthquake program with that of Interior during the
past year.
Increased efforts will be applied to find safe and effective control
methods for managing nuisance bird populations, research on migratory game birds other than waterfowl will be expanded, and studies
of pollution effects on wildlife will be initiated. Research relating to
predator animal damage will be expanded.

232

THE BUDGET FOR FISCAL YEAR 1975
DEPARTMENT OF COMMERCE

Department of Commerce obligations for the conduct of research
and development and facilities will increase by $55 million in 1975,
from $222 million in 1974 to $277 million in 1975. This reflects increases
for the research and development programs of the National Oceanic
and Atmospheric Administration (NOAA), the Maritime Administration (MARAD), and the National Bureau of Standards (NBS).
The principal objectives of the research and development programs
in the Department of Commerce are to continue to improve the
Nation's environmental prediction and warning capabilities, develop
technology to improve the competitive position of the U.S. maritime
industry, and encourage technological advancement through improved
performance and measurement standards.
In 1975, NOAA will continue research to help reduce loss of life and
property from natural disasters by improving the detection and tracking of weather systems and violent storms, by extending the forecasting and data gathering programs, and by exploring the modification
of severe storms.
In the marine sciences, NOAA will conduct biological research
aimed at the conservation, development, and management of
commercial fisheries of the United States. NOAA will also continue
research programs in ocean dumping and in coastal zone management, and begin the readjustment of the North American Datum.
The technology development and utilization programs of NBS will
be increased, with emphasis on efforts to develop measurement
methods and standards for energy conservation, the abatement and
control of environmental pollution, the improved reliability and effectiveness of clinical testing laboratories, the technology of radiation
control, and improved Federal management and utilization of computers.
The Maritime Administration will continue to emphasize research
and development to assist the U.S. maritime industry to develop the
technology necessary to improve its international competitive position.
The 1975 emphasis will be on improvements related to ship-building
methods and equipment, nuclear ship propulsion and shipping operations information systems.
Research to reduce loss of life from fires will be consolidated and
expanded in a new National Bureau of Fire Prevention in the
Department.
ENVIRONMENTAL PROTECTION AGENCY

Environmental Protection Agency (EPA) research and development
in 1975 will continue to emphasize research on human health effects,
ecological effects, measurement methods research, and quality assurance. The expansion of these program areas will strengthen the basis
for standards set by EPA and support the development of effective
control strategies while continuing to identify and evaluate long-range
environmental problems. The accelerated energy research and development program for 1975 will include some additional environmental
research and further increase in funds to augment the total EPA
program.

SPECIAL ANALYSES

233

Air quality research and development efforts will involve expanded
epidemiological and toxicological studies of the effects of pollution on
human health and continued studies of the health effects of combustion products and catalytic reactor emissions. Ecological effects research will include studies of atmospheric chemical and physical
processes of pollutants and continued studies to characterize the combustion products of fuels, fuel additives and catalytic reactor emissions
and their environmental effects. The air measurements technology
program will be expanded to determine compliance with standards
and to provide for the continuous monitoring of stationary sources.
Ongoing demonstrations of stack gas treatment technology will continue and attention to control of fine particulates will be increased.
Water quality research will emphasize on the development of criteria
for the safe treatment and disposal of effluents and sludges from
municipal and industrial wastewater treatment plants. Work will
continue on the development of criteria for marine and freshwater
fish and aquatic life; further understanding of the eutrophication process and lake restoration procedures; and pollution problems of the
Great Lakes. In the area of control technology the major thrust will be
aimed at area pollution control research and improving technology
for existing municipal source control and advanced waste treatment.
Industrial source control program will concentrate on developing
techniques to meet effluent guidelines for critical industries.
Water supply research will focus on the health effects of asbestos in
drinking water with continued support for research to determine the
presence of organics and infectious agents in drinking water in order to
develop criteria for setting standards. Research into the effects of
trace organics, asbestos, nitrates, trace metals and suspended solids,
and their removal will continue.
Pesticides research and development will concentrate on expanding
the health effects program by undertaking inhalation toxicology
studies to assess the significance of respiratory versus dermal exposures
to people handling pesticides, and development of human exposure
data relating to the safe handling of pesticides. Other research will
focus on health effects involving non-ionizing radiation and toxic
substances.
RESEARCH AND DEVELOPMENT IN COLLEGES AND
UNIVERSITIES
An important component of Federal support of science is the level of
funds to universities for research and development. These funds represent grants and contracts with colleges and universities for research and
development that can contribute to the achievement of agency
missions. The funds are part of the total research and development
efforts of the various agencies as shown above in this analysis. The
1975 budget will provide $2,262 million in expenditures for this purpose, as contrasted with $2,107 million in 1974, and $1,888 million in
1973. These expenditures do not include the support to universities and
colleges that will result from the allocation of the additional 1975 funds
for acceleration of energy research and development and related
research activities. A significant increase in the 1975 expenditure level
for R. & D. at colleges and universities is anticipated as a result.

234

THE

BUDGET FOR FISCAL YEAR

1975

While continuing Federal support for basic research on all fronts,
the 1975 budget supports educational institutions in their efforts to
undertake research focused on important national and regional problems—ranging from studies of the causes of cancer and heart disease to
the problems of industry in improving economic productivity. The
increase in research funding will not only assist in the support of
faculty investigators, but will also provide valuable experience and
training for science and engineering graduate students through employment on research projects. Obligations and expenditures are shown by
agency in table 0-8.
Table 0-8. RESEARCH AND DEVELOPMENT IN COLLEGES AND
UNIVERSITIES i (in millions of dollars)

Department or agency

Health, Education, and Welfare
National Science Foundation
Defense—Military functions
National Aeronautics and Space Administration
Atomic Energy Commission
Agriculture
All other
Total

Expenditures
1973
actual

1974
estimate

1975
estimate

937
329
218
127
83
88
106

1,159
39
3
24
0
9
7
8
4
9
5
18
2

1,232
49
0
23
0
9
1
9
4
9
9
14
3

1,888

2,107

2,262

1
Amounts reported in this table are included in the totals for conduct of research and development
in table O—2, and do not include the support to universities and colleges that will result from the
allocation of the additional 1975 funds for accelerated energy research and development and related
research activities.

SPECIAL ANALYSIS P
FEDERAL ENVIRONMENTAL PROGRAMS
OVERVIEW
1

Outlays for environmental programs will be approximately $7
billion for 1975, an increase of $1.7 billion over 1974. The objectives of
these programs are: to increase understanding of the total environment; to protect the environment and to enhance specific portions of
it; and, to control and abate pollution. Outlays for understanding,
describing, and predicting the environment will be $1,107 million, an
increase of $84 million over the 1974 level. Outlays for protection and
enhancement activities in 1975 will be $1,099 million, an increase of
$92 million over the prior year's level. Outlays for pollution control
and abatement activities will be $5.26 billion, an increase of $1.5
billion over the 1974 figure. In addition, there will be approximately
$300 million more for the environment in 1975 as a result of new programs in response to developing alternative sources of energy. This
latter increase is not reflected in this analysis. Trends in total environmental outlays and the activities involved are displayed in chart P - l .
Environmental Outlays, by Activity, 1971-1975

H^B

Protection and Enhancement

V//A

p-1

Understanding, Describing and Predicting
Pollution Control and Abatement

1971
Fiscal Years

1972

1973

1974

1975
Estimate

1
Outlays are expenditures in payment of obligations which have been made under budget authority
granted by Congress. Budget authority for 1975 represents what the President will recommend
that Congress appropriate. Unless otherwise noted, all figures in this Analysis are outlays.

235

236

THE BUDGET FOR FISCAL YEAR 1975

Understanding, describing, and predicting the environment.—Activities which describe the environment, predict environmental conditions, and increase man's understanding of his surroundings are conducted by 11 Federal agencies. Outlays in 1975 are
expected to total $1,107 million. Table P-2 describes these outlays
with agency breakdowns. Activities conducted in order to understand,
describe, and predict the environment, as presented in table P - l ,
include:
• observing and predicting weather, ocean conditions, and environmental disturbances (such as earthquakes);
locating and describing natural resources;
preparing physical environmental surveys of the environment;
research on modifying weather;
understanding the impact of man upon the environment; and
ecological and other basic environmental research.
Total research and development expenditures, aggregated from each
of the three functional categories, are displayed in table P-8.
Environmental protection and enhancement activities.—
Environmental protection and enhancement activities are conducted
by 11 Federal agencies with outlays expected to total $1,099 million
in 1975. Table P-4 breaks these figures down for agencies with the
largest programs. Activities budgeted for in this area include:
• city recreation;
• preservation of unique natural areas and endangered species;
• conservation and management of sport fish and wildlife;
• noncity recreation;
• historic preservation and rehabilitation; and
• other similar activities which account for 9% of the environmental protection and enhancement dollar.
Funding for these activities is displayed in table P-3.
Pollution control and abatement activities.—The largest
portion of environmental expenditures is for pollution control and
abatement activities. This reflects the expansion of the construction
grants program for sewage treatment facilities under the 1972 Water
Pollution Control Act (Public Law 92-500). The outlays for such
grants will be $3.35 billion, 70% of all pollution control and abatement
activities. While the construction grant program is the largest component of this category, it is only one of a number of programs to fight
pollution conducted b \ 15 Federal agencies. Other abatement and
control activities, as reflected in table P-6, are:
• extending financial assistance to State and local governments for
pollution control programs;
• regulating pollution and enforcing standards;
• conducting research specifically oriented toward controlling and
abating pollution; and
• controlling pollution from Federal facilities.
Table P-7 displays which agencies conduct these activities.

SPECIAL ANALYSES

237

Outlays for all three categories of environmental programs for 1975
are displayed below. Because of their relative magnitude, outlays for
construction grants have been separated from the pollution control
and abatement category.
1975 ENVIRONMENTAL OUTLAYS (estimates)
(in millions of dollars)
Understanding, describing, and predicting the environment
Protection and enhancement activities
Pollution control and abatement activities (excluding construction grants)
Construction grants

1,107
1,099
1,908
3,350

UNDERSTANDING, DESCRIBING, AND PREDICTING THE
ENVIRONMENT

Over $1 billion will be spent to increase understanding of the
environment. This knowledge is necessary to protect and enhance the
environment as well as to control pollution and curtail environmental
degradation. A wide range of activities are conducted to understand,
describe, and predict environmental conditions. Objectives range from
the provision of routine weather forecasts to the scientific understanding of complex ecological systems.
[In millions of dollars]
1973
actual

Budget authority
Outlays

1974
estimate

1975
estimate

1,008
956

1,043
1,023

1,134
1.107

As table P - l indicates, almost half of the funding will support environmental observation, research, and measurement in order to
describe and predict weather, ocean conditions, and earthquakes.
Outlays will amount to $498 million in 1975 for activities in these
areas alone. $273 million will also be provided for survey activities
for the purpose of preparing maps and charts, and locating and describing natural resources. Weather modification research will receive
$21 million. Research to develop a better understanding of the impact
of the environment on man, and to increase knowledge of basic
ecology and environmental systems will receive $159 million in 1975.
Agencies involved.—Department of Transportation research will
focus on making transportation facilities compatible with the environment, and on conserving energy through more efficient use of existing
transportation resources. The Coast Guard collects oceanographic
and meteorological data for the preparation of maps and charts to be
used in the development of ocean transportation. FAA activities are
devoted to an understanding of adverse environmental effects of
aircraft noise, pollution, and sonic booms. The agency will continue
work on a multiyear, multimillion dollar research program on the
effects of engine exhaust on the stratosphere.

540-700 O - 74 - 16

THE

238

BUDGET FOR FISCAL YEAR 19 75

Table P-1 . UNDERSTANDING, DESCRIBING, AND PREDICTING
THE ENVIRONMENT (in millions of dollars)
Type of activity

Observe and predict weather,
ocean conditions, and disturbances:
Research and development. __
Operations
Locating and describing natural
resources:
Research and development. __
Operations
Physical environmental surveys:
Research and development. __
Operations
Weather modification research..
Research on environmental impact on man
Ecological and other basic environmental research
Total

Budget authority
1973

1974

Outlays
1975

1973

1974

1975

145
321

151
339

151
368

135
317

142
326

149
349

139
127

128
134

147
151

130
120

126
138

143
150

14
96
18

12
107
21

9
128
22

10
93
17

14
104
21

12
123
21

1,008

1,043

1,134

956

1,023

1,107

Research by the Department of Housing and Urban Development includes analyses to increase knowledge of the effects of urban and
nonurban change, particularly as it affects and is affected by the
natural environment.
The Smithsonian Institution develops environmental base-line
data on the abundance and distribution of plants and animals in
relation to modification of the environment by man. It also identifies
indicator organisms that can be used in monitoring the environment.
In the Department of Commerce, the National Oceanic and Atmospheric Administration conducts a wide range of environmental
monitoring and prediction activities, weather modification experiments, surveys for mapping and charting, data archiving and dissemination services, and related research. Particular emphasis will
be given to improving weather monitoring, prediction and warning.
Increased outlays in 1975 will support improvement of weather prediction and warnings through better basic observations. The weather
satellite program will provide enhanced environmental warning
services and will prepare for the next generation of polar-orbiting
satellites. Implementation of the air quality observation network will
be continued as will coastal zone research.

SPECIAL ANALYSES

239

Table P-2. UNDERSTANDING, DESCRIBING, AND PREDICTING
THE ENVIRONMENT—BY AGENCY (in millions of dollars)
Budget authority
Agency

Commerce
Defense—Military
National Science Foundation.._
Interior
National Aeronautics and Space
Administration
Agriculture
Health, Education, and Welfare.
Transportation
Smithsonian Institution
Other agencies
Total

1973
ictual

1974
estimate

Outlays

1975
estimate

1973
actual

1974
estimate

1975
estimate

282
146
107
152

322

364

281

313

348

17
5
16
0
16
5

11
4
97
12
4

14
2
14
1
2
8
1
8
8
1
1

17
2
13
0
2
6
2
3
8
8

17
4
14
0
12
5
11
2
18
1
3
1
1
8
8
1
1

19
4
19
0
17
7

142
109
31
23
8
8

10
6
13
1
18
7
15
2
16
2
2
9
1
4
8
1
6

1,008

1,043

1,134

956

1,023

1,107

17
2
16
2
3
4
1
4
8
1
6

The Department of Health, Education, and Welfare, through the
National Institute of Environmental Health Sciences, conducts
research directed at the identification of chemical, physical, and
biological environmental factors which affect human health.
The Department oj Defense conducts activities in environmental
observation and measurement to describe and predict weather,
ocean conditions, and disturbances important to military operations.
Research is conducted in oceanographic instrumentation development and operational systems for observing and forecasting the
ocean environment. The Corps of Engineers conducts hydrologic
studies as a background for future use in optimum design, construction, and operation of water control structures. The Corps also
examines the effects of construction on coastal ecology in order to permit more accurate assessment of the ecological effects of offshore
construction, and dredging.
The National Science Foundation supports environmental research
with the objective of increasing the Nation's knowledge base in order
to improve environmental management. Studies are undertaken in all
aspects of the biosphere on an environmental systems basis. Efforts
will continue to measure and assess the environmental effects of
mining, manufacturing, use, and disposal of metallic and synthetic
organic compounds.
In the Department of Agriculture, the Agriculture Research Service
conducts research by remote sensing to study animals in a natural
environment, crop conditions and insect infestations, and soil-waterplant conditions in order to improve both animal and crop production.
It is also increasing its efforts to monitor and understand the ecological
patterns of disease and insects in order to develop an integrated pest
management program which would reduce the use of pesticides.
The Forest Service studies forest ecosystems so that policy decisions
and management practices can lead to improved productivity while
maintaining the quality of the environment. The Soil Conservation
Service conducts soil and snow surveys, and makes water supply
forecasts.

240

THE BUDGET FOR FISCAL YEAR 19 75

The Department of the Interior attempts to increase understanding
of the environment through research conducted by its various bureaus.
The Bureau of Reclamation is conducting research on weather modification, water salinity problems, and the effects of water project
construction operations on ecology and limnology.
The Park Service conducts natural science ecological studies leading
to improved resource management and proposals relating to impact
of developments on the park environment.
The Office of Water Resources Research sponsors, and provides for
the conduct of research, investigations, and experiments in the water
resources field.
The National Aeronautics and Space Administration, through its
use of satellites, has developed a number of programs with the potential
of making accurate short-term (a few hours) weather predictions, and
accurate long-term (2 weeks) weather and climate predictions. Earth
resources are being studied through investigations conducted through
the Earth Resources Technology Satellite (ERTS) Program. In addition to helping to better understand natural resources systems, the
NASA ERTS programs are used for identifying, evaluating, and
monitoring animal and plant habitats and distributions, water and
vegetation distribution, geological effects on vegetation distribution
and surface moisture, and the effect of thermal and particulate pollution on the ecology and environment.
ENVIRONMENTAL PROTECTION AND ENHANCEMENT ACTIVITIES

Over $1 billion will be spent to protect and enhance the environment. Emphasis is on programs which will enable man to use and
enjoy the outdoor environment through the provision of recreational
facilities, parks, and open space, by planning for the conservation and
management of wildlife and fishery resources.
[In millions of dollars!
1973 actual

Budget authority
Outlays

993
820

1974 estimate 1975 estimate

780
1,007

1,060
1,099

The Federal Government provides grants to State and local governments for protection and enhancement activities. These include funds
for acquiring and developing land for recreational purposes, for preserving open space, and for fish and wildlife refuges. Outlays for
aid to State and local governments will increase from $329 million
in 1974 to $341 million in 1975.
The Federal Government also performs direct activities such as
acquiring lands for the preservation of nationally unique natural areas
and for recreation, supporting sport fisheries and wildlife preservation
activities, preserving historic properties, and conducting related
functions. Major environmental protection and enhancement activities
are:
• city recreation, including federally assisted or direct Federal
projects or activities such as historic preservation;
• preservation and management of unique natural areas and
endangered species—national parks, monuments, scenic rivers,
trails, wildernesses, seashores, and refuges for endangered species;

241

SPECIAL ANALYSES

• provision of noncity general recreation in national recreation
areas, recreation programs in national forests, and recreation
sites at Federal water projects;
• management of sport fish and wildlife at national wildlife refuges,
fish hatcheries, and projects to protect rare and endangered
species; and
• historic preservation and rehabilitation, including national historic sites, military parks, and other federally assisted historic
preservation and rehabilitation.
Table P-3. ENVIRONMENTAL PROTECTION AND ENHANCEMENT
ACTIVITIES (in millions of dollars)
Budget authority
1973
actual

Financial aid to State and local
governments:
Purchase, development, and
operations:
City recreation
Preserve unique natural
areas and protect endangered species
Noncity general recreation.
Sport fish and wildlife
Historic preservation and
rehabilitation
All other State and local
aid

Outlays
1973

1975

1974

1975

Subtotal
_.

22
140
71

0
59
79

0
148
87

19
84
66

22
126
73

22
125
73

176

323

248

329

341

106

103

109

202
190
115

144
147
123

158
170
144

155
172
110

150
159
127

160

110

119

653

Direct Federal activities:
Purchase, development, and
operations:
City recreation _
Preserve unique natural
areas and protect endangered species
__
Noncity general recreation.
Sport fish and wildlife
Historic preservation and
rehabilitation
__
All other direct Federal
activity

340

Subtotal

Total

1974

605

737

571

678

758

993

780

1,060

820

1,007

1,099

174
147

Agencies involved.—The Department of the Interior, through
its Bureau of Land Management, protects and manages over 450
million acres in the Western States and Alaska, representing 20%
of America's land base. Legislation proposed by this Administration
would establish a national policy that these national resource lands be
managed under principles of multiple use and sustained yield in such a
way as to protect the quality of the environment.

242

THE BUDGET FOR FISCAL YEAR

1975

The Bureau of Outdoor Recreation promotes coordination of outdoor recreation programs, and administers the Land and Water Conservation Fund which provides grants for planning, acquisition, and development of State and local recreation areas and Federal purchases of
nationally important lands. Funds to be obligated for these programs
in 1975 will total $300 million, of which $196 million will be for grants
to State and local governments, and $98 million will be for Federal
purchase of parklands.
Table P-4. ENVIRONMENTAL PROTECTION AND ENHANCEMENT
ACTIVITIES—BY AGENCY (in millions of dollars)
Agency

1974
estimate

Outlays

1975
estimate

1973
actual

1974
estimate

1975
estimate

737
92
60
23
81

Interior
Agriculture.
Defense—Civil
Commerce
Other agencies
TotaL___

Budget authority
1973
actual

587
87

844
92

581
83

739
97

803
96

55
37
14

71
40
12

61
23
11

56
31
84

73
43
84

993

780

1,060

820

1,007

1,099

The Bureau of Sport Fisheries and Wildlife provides assistance
to State and local governments for fish and wildlife restoration,
management, and research. The Bureau administers 95 hatcheries
and 356 units in the National Wildlife Refuge System containing
30.7 million acres. Endangered species are protected on 82 of the
national wildlife refuges.
The National Park Service administers 298 areas comprising about
29 million acres located in 47 States, the District of Columbia, Puerto
Rico, and the Virgin Islands. These include national parks, monuments,
historic sites and other areas which have been established to preserve
the Nation's natural and historic heritage.
Public recreation is a major function at many of the Bureau of
Reclamation's multipurpose projects.
In the Department of Commerce, the National Oceanic and Atmospheric Administration is placing emphasis on improved management
of the Nation's coastal zone through federally assisted and coordinated
State programs. In 1975, NOAA will continue to provide grants to
States for the preparation of their coastal zone management plans and
the initial phases of administration of those plans. Other increases
in 1975 will provide for administration and enforcement of the Marine
Mammal Protection Act of 1972, research on the status of stocks of
whales, and research on fur seals. Research on aquaculture, and grants
to States for the enhancement and restoration of the marine fishery
resources will be continued.
The Department of Agriculture carries out a variety of environmental
activities, particularly through the Forest Service. The 187 million
acres of National Forest lands are managed in accordance with the
provisions of the Multiple Use-Sustained Yield Act to provide outdoor
recreation, range, timber, watershed, mineral, and wildlife values in

SPECIAL ANALYSES

243

combinations that will best protect resources without impairing the
productivity of the land.
The Department of Defense (Corps of Engineers) provides facilities
for water-based recreation at reservoirs and other public works.
POLLUTION CONTROL AND ABATEMENT ACTIVITIES

The largest portion of environmental expenditures is for cleaning up
pollution and stopping further environmental degradation. In outlays,
this will be $5,099 million.
[In millions of dollars]
1973
actual

Budget authority
Outlays
1

1974
estimate

1975
estimate

8,521
1,925

5,768
3,714

* 1,929
5,263

Contract authority of $4,000 million for construction grants in 1975 was made available in 1974
as provided by law.

Table P-5 expresses the Nation's funding for pollution control and
abatement, by media polluted. Among the media, water receives the
greatest share of total Federal pollution control obligations. This
large share is a result of grants and loans for construction of municipal
waste treatment facilities. Air pollution programs include research and
development, grants to State and local air pollution control agencies,
and direct Federal operations such as monitoring, standard setting,
and enforcement. Activities relating to pollution of land are for
research and other studies concerned with the effects of acid mine
drainage, nutrients, pesticides, and other substances. Federal pollution
control activities relating to radiation, pesticides, solid wastes, and
noise are directed toward research relating to effects, control technology, standard setting, and enforcement. Excluded from the funding
shown above for pollution control and abatement activities are functions carried on for some other purpose but which contribute to the
reduction of pollution. Table P-5 also summarizes the total Federal
effort in terms of funding associated with selected pollutants.
Table P-5. POLLUTION CONTROL AND ABATEMENT ACTIVITIESBY MEDIA OR POLLUTANT (in millions of dollars)
Media or pollutant

Media polluted:
Water:
Construction grants and loans
Other
Air
Land
Other (e.g., living things, materials)
Multimedia (i.e., more than 1 of above)
Total
Selected pollutants: l
Solid wastes
Pesticides
Radiation
Noise
1

Obligations
1973
actual

1974
estimate

3,299
431
461
61
293
131

4,478
561
630
62
279
114

5,159
696
701
66
292
145

4,676

6,124

7,059

150
61
181
66

198
68
192
88

200
71
236
62

Funds for selected pollutants are included in the "media" breakdown above.

1975
estimate

244

THE

BUDGET FOR FISCAL YEAR

19 75

Activities involved.—Financial aid.—Outlays to construct municipal sewage treatment facilities will rise to $3.35 billion an increase of
$1.35 billion over 1974. Funds allotted to the States for waste treatment plants from contract authority will increase by $1 billion to a
level of $4 billion, a 33% increase over 1974 and a 100% increase over
1973 levels. This $4 billion allotment to the States is reflected in
1974 budget authority, not 1975 budget authority, since it was
made available for obligation in 1974. Grants from the allotted
funds will cover 75% of the eligible costs of constructing municipal
sewage treatment plants. In addition, Federal tax exemptions for
industrial revenue bonds for pollution control facilities will contribute
to the increased use of such bonds, the level of which rose from $550
million in 1972 to $1 billion in the first half of 1974. The Environmental
Financing Authority of the Department of the Treasury will assist
cities by buying municipal bonds for sewage treatment facilities if
they are not purchased in the marketplace.
Table P-6. POLLUTION CONTROL AND ABATEMENT ACTIVITIES BY
FUNCTION (in millions of dollars)
Budget authority
Type of activity

Financial aid to State and local
governments1
Research and development
Federal abatement and control
operations
c
Manpower development
Reduce pollution from Federal
facilities
Other pollution control and
abatement activities
Total

1973
actual

1974
estimate

Outlays

1975
estimate

1973
actual

1974
estimate

1975
estimate

7,242
599

4,362
688

2 371
735

908
489

2,282
644

3,632
719

217
16

263
13

297
11

215
14

265
13

304
12

311

20
7

31
2

14
7

34
4

32
9

135

11
7

14
9

15
2

16
6

24
0

1,929

1,925

3,714

5,263

8,521

5,768

1
These figures include water and sewer programs of the type funded by FHA and OEO. These
figures were not included in previous Analyses.
2
Contract authority for the Environmental Protection Agency in 1975 was made available in
1974 as provided by law, and therefore appears in the 1974 column for Budget Authority instead
of the 1975 column.

Included in the grant figures are funds made available to State,
regional, and local agencies to help support air pollution control programs. Outlays of $696 million in 1975 will provide financial assistance
for implementing the national primary and secondary ambient air
quality monitoring systems, emissions inventories, plans for effective
enforcement of standards, land use and transportation control regulations, and air pollution emergency plans. Technical assistance is also
provided to pollution control agencies for air quality programs.
Research and development.—Spending for Research and development
activities in the area of pollution control and abatement will increase
from $644 million in 1974 to $719 million in 1975. These activities
include efforts oriented towards determining the sources and effects of
pollution, and developing and testing pollution control technologies.

SPECIAL ANALYSES

245

The major research emphasis will be on the refinement and application of current abatement technologies, the study of human health and
ecological effects, the economic costs and benefits of alternative standards and regulatory approaches and research on low emission fuel
efficient automobiles.
Water quality research will emphasize development of criteria for
protection of marine and fresh water fish and other aquatic life.
Research in control technology and improving water quality in the
Great Lakes will be continued.
Air quality research and development efforts will concentrate on
pollution effects through field investigations, regional air pollution
models, and epidemiological and toxicological studies of the effects of
pollutants on man and animals. Ongoing demonstrations of stack gas
treatment technology will be completed and efforts will be directed to
long-term technologies relative to clean fuel development.
Abatement of pollution from Federal facilities.—Federal agencies are
involved in a range of activities to control pollution from their facilities. Among them are construction or modification of waste treatment
plants, stack gas cleaning for air pollution control, and cooperative
projects with States and communities for solid or liquid waste disposal.
Outlays for these activities will be $392 million in 1975.
Other abatement and control activities.—Outlays will increase by $39
million in 1975 for Federal abatement and control operations. Funding
for manpower development activities will decline at the Federal level.
Agencies involved.—The Environmental Protection Agency conducts and administers the major pollution control and abatement
activities of the Federal government. Such outlays for EPA will
increase from $2,559 million in 1974 to $3,991 million in 1975. The
greatest single category of Federal spending for pollution control
and abatement is for grants for constructing or improving municipally
owned waste treatment plants.
Grants are also made for the development of basin, metropolitan,
and/or regional water quality management plans. Grants to State and
interstate agencies help establish and maintain programs of enforcement, monitoring, analysis of water quality, and review and appraisal
of municipal wastewater construction project. Similar grants are also
made to State and local agencies to help support their air pollution
control programs, including the implementation of plans to achieve
and maintain national ambient air quality standards.
Research and development accounts for $178 million of EPA's
budget. This will be allocated for studying the processes and effects of
pollutants, including the health effects of pollutants, their ecological
and other nonhealth effects, the movement and transformation of pollutants in the environment, and the measurement of pollution problems and research on low emission fuel efficient automobiles.
EPA's abatement and control activities range across the total spectrum of environmental problems—monitoring, establishment and
enforcement of standards, issuing of permits, and providing technical
assistance regarding air, water, solid waste, noise, hazardous materials,
and pesticides pollution.

246

THE BUDGET FOR FISCAL YEAR 19 75

Table P-7. POLLUTION CONTROL AND ABATEMENT A C T I V I T I E S BY AGENCY (in millions of dollars)
Budget authority
1973
actual

Environmental P r o t e c t i o n
Agency.
.
Defense—Military
Atomic Energy Commission
Transportation
Agriculture2
Defense—Civil
Interior
Commerce2
National Aeronautics and Space
Administration
National Science Foundation. __
Other agencies _
Total

1974
estimate

Outlays

1975
estimate

1973
actual

1974
estimate

1975
estimate

7.427
291
186
90
142
13

4.629
294
202
100
128
10

i 695
343
236
113
120
12

1,113
143
174
51
121
13

2.559
249
194
70
174
10

114
150

168
115

176
100

97
102

151
92

142
12
157
83

15
32

\7
29

19
35

14
63

15
135

17
148

8,521

5,768

1,929

1,925

3,714

5,263

3.991
319
231
84

1
Contract authority for the Environmental Protection Agency in 1975 was made available in
1974 as provided by law.
2
Figures include expenditures for water and sewer programs. These figures were not included
in previous Analyses.

The Department of the Interior's Bureau of Mines conducts research
and development into ways to prevent and abate pollution from mining
and is attempting to develop improved methods of removing pollutants from mineral processing plants, and for recovering the valuable
constituents in mineral processing wastes. It will increase research to
develop methods of converting coal to fuel gas with less pollution.
The Atomic Energy Commission's environmental research, monitoring, and surveillance activities provide data to assure that nuclear
operations are conducted according to procedures which minimize
or eliminate harmful effects on the environment. These activities also
enable the AEC to carry out its responsibilities for regulating the
use of radioactive materials, including licensing of nuclear power
plants, and assist the Commission in developing guidelines and policies
related to all Federal agencies.
Most of the environmental program is directed toward the siting
problems of nuclear plants in fulfillment of the requirements of the
National Environmental Policy Act. Increased emphasis is being
placed on offshore plant siting and regional studies.
The Department ojDefense will expand its research program to reduce
pollution from its industrial production, military, and other facilities.
The Corps of Engineers administers a permit program under the
Federal Water Pollution Control Act which makes it illegal to discharge dredged or fill material into a navigable water without a permit.
The Corps will continue to prepare studies regarding implementation
of regional water quality management plans.

SPECIAL ANALYSES

247

The National Aeronautics and Space Administration conducts a
continuing research and development program to reduce aircraft noise
and pollution. NASA is undertaking a major new thrust to develop
spacecraft with the capability of detecting and monitoring atmospheric
pollution.
The Department of Commerce conducts a number of pollution control
and abatement activities. Its Economic Development Administration
and the Regional Action Planning Commissions provide grants and
loans for the construction of water and waste treatment facilities and
water and sewer lines where these items are needed to foster economic
development. Technical assistance is also provided to solve pollution
control and abatement problems. The National Oceanic and Atmospheric Administration will install equipment to further control water
pollution resulting from its ship operations. The National Bureau of
Standards is engaging in research and development for reference
standards and measurement systems for air, water, radiation, and
noise pollution.
The Department of Transportation's major program is in the area
of noise pollution control. The objectives 01 the noise abatement
program are to develop quieter diesel engines, jet exhaust noise
suppression systems, and to assist State and local regulatory and
planning bodies in transportation noise reduction. The Federal Highway Administration will study techniques to decrease the impact of
highway noise, and to control erosion from highway construction.
The Federal Aviation Administration will continue its program to
develop quiet aircraft engines. It will also investigate sonic booms, and
development of design guidelines for airports so they fit in with neighboring land use. The Urban Mass Transportation Administration will
continue programs to demonstrate advanced bus and rail technology
to reduce pollution and to conserve energy.
The Department of Agriculture conducts research on agriculturally
related pollution such as pesticides, animal and crop processing wastes,
fertilizer, and plant nutrients. The Cooperative State Research Service
and the Extension Service develop methods to reduce pollution from
the production and processing of agricultural products. The Forest
Service investigates and applies methods of controlling sediment pollution. The Animal and Plant Health Inspection Service conducts programs to reduce the amount of pesticides used to control pests. The
Farmers Home Administration makes loans to local organizations to
provide for the collection of sewage, and to provide for the collection
and disposal of human, animal, agricultural, and other wastes in rural
areas.
Environmental research and development activities.—Funding for research and development programs which have been described
in this Analysis have been excerpted and are summarized in table P-8.

248

THE

BUDGET FOR FISCAL YEAR

1975

Table P-8. ENVIRONMENTAL RESEARCH AND DEVELOPMENT
ACTIVITIES (in millions of dollars)
Budget authority
1973
actual
Pollution control and abatement
Understanding, describing, and
predicting
. _
Total

1974
estimate

599

688

462

Outlays

1975
estimate

463

1,061

1,151

1973
actual

1974
estimate

1975
estimate

735

644

719

488
1

489
426

455

485

1,223

915

1,099

1,204

1
This figure will increase by approximately $300 million for environmental control technology and
to study the environmental effects of alternative energy sources.

OTHER ACTIVITIES

The meaning of the term "environment" is still subject to widely
varying definitions. This special analysis of Federal funding for environmental activities has been limited to selected areas. However,
the government conducts a wide range of programs to attack problems
of the total environment. Among the areas of federally funded activities with significant environmental aspects which are not included
in this analysis are:
• Mass transit—the Department of Transportation will assist in
the purchase of buses to be used in cities with serious air pollution
problems. These will be available in the near term as an alternative
to the automobile. DOT will also invest in rapid rail systems.
• Indoor environment—the Occupational Health and Safety
Administration of the Department of Labor is concerned with the
health of the indoor work environment, as is the Mining Enforcement and Safety Administration in the Department of the Interior. Technical support is provided by the Department of
Health, Education, and Welfare's National Institute for Occupational Safety and Health.
• International environmental cooperation—The Department of
State contributes to the United Nations Environment Fund
for the support and coordination of international environmental
activities, and, with the Council on Environmental Quality, has
been active in working on a number of international environmental treaties such as the International Convention on the
Prevention of Marine Pollution by Dumping of Wastes and Other
Matter.
• Urban environment—the Center for Disease Control within the
Department of Health, Education, and Welfare is attacking
problems associated with urban blight, such as rat control and the
control of childhood lead-based paint poisoning. The National
Historic Preservation Trust provides for the restoration and
maintenance of individual building of historic interest.

SPECIAL ANALYSE®

249

• Pesticides—the Food and Drug Administration of the Department
of Health, Education, and Welfare analyzes foods to detect the
presence of pesticide residues. The Bureau of Sport Fisheries and
Wildlife in the Department of the Interior does the same with
fish to make sure that they do not contain unacceptable levels of
toxics. The Occupational Safety and Health Administration and
the Environmental Protection Agency regulate field reentry
standards for those who work in fields which use pesticides. The
Department of Agriculture, the Environmental Protection
Agency, and the National Science Foundation research alternative
ways to control pests with reduced reliance on chemical pesticides.

EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET

Full text of Budget of the United States Government, Special Analyses : Fiscal Year 1975

FRASER